Nov 7, 2025
Retirement Transition Q&A: 3 Critical Investment Steps for New Retirees
Introduction
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You’ve spent decades climbing the mountain of saving for retirement. But now that you’ve reached the summit, the descent—drawing down your assets—can be even more challenging. How you manage your investments in the first few years of retirement can set the stage for decades of financial security.
On the "Retirement Done Right" podcast, David Rath and outline three essential steps for new retirees. Here’s a breakdown of their crucial advice.
Q1: I Just Retired. What's the First Thing I Should Do with My Investments?
Your immediate priority is to create a safety net for your living expenses. The first step is to estimate your annual living expenses that will be funded by your investment accounts.
The critical "pro tip" is to then build a buffer. You should set aside two to three years' worth of these living expenses in safe, liquid instruments like money market funds, CDs, or short-term government bonds.
Why? The goal of this "safe money bucket" isn't to beat the market; it's to provide security and peace of mind. Knowing your essential expenses are covered for the next few years means you won't be forced to sell stocks during a market downturn just to pay the bills, which can permanently damage your portfolio's longevity.
Q2: How Should I Approach Risk in My Portfolio Once I'm in Retirement?
Once your short-term safety net is in place, you must honestly evaluate the risk in the rest of your portfolio. The key mindset shift is to stop thinking about what can go right and start considering what can go wrong.
A simple way to gauge risk is to look at your percentage of equities (stocks). However, it's crucial to understand that more risk does not equal more return; it equals the potential for more return.You need a portfolio that allows for long-term growth without causing you to lose sleep at night. If you're unsure, this is a perfect time to get a second opinion from a professional.
Q3: What is the Biggest Tax Mistake Retirees Make with Their Withdrawals?
A common and costly mistake is not having a tax-efficient withdrawal strategy. You must evaluate the tax impact of your withdrawals across all your accounts.
Ideally, you have savings in three "tax buckets":
Tax-Free (Roth IRA)
Tax-Deferred (Traditional IRA/401k)
Taxable (Brokerage Accounts)
The goal is to strategically pull from these different buckets to minimize the amount of taxes you pay throughout your entire retirement. If all your money is in a pre-tax IRA, you could face higher taxes and miss out on significant planning opportunities, especially when you factor in Social Security and pensions. As the hosts say, "You always want to make sure that you pay Uncle Sam; you never want to leave a tip."
