Retirement rarely sneaks up out of nowhere, but the portfolio risk leading into it often does.

After years of growth-focused investing, many people reach their 60s still heavily weighted in stocks without realizing how vulnerable they are to a sharp market drop.

Rebalancing is how you steer your investments from “maximum growth” toward “reliable income” in time.

Why Rebalance

Rebalancing simply means adjusting your mix of stocks, bonds and cash so it lines up with your actual goals and risk tolerance. The aim is not to squeeze every last dollar of return, but to control how much damage a downturn can do to your retirement lifestyle.

Especially near retirement, it becomes more about protecting what you have than chasing the next surge.

According to Vanguard-based investment guidance, “Rebalancing isn’t about market‑timing; it’s about sticking to Vanguard’s principles for investing success and creating a strategy to stay in sync with your long‑term goals.”

Pre-Retirement Shift

Financial planners often start tightening risk about a year before a planned retirement date. At that point, there may not be enough time to recover from a big market decline.

History shows how dangerous this can be: just before the 2008–2009 crash, many late-career workers had portfolios that were overwhelmingly in stocks and saw their balances cut painfully.

Target Allocation

There is no single “correct” retirement mix, but many professionals suggest something in the neighborhood of 60% stocks, 35% bonds and 5% cash for someone in their 60s. That blend still allows growth, yet introduces meaningful stability.

Your exact numbers should depend on how much guaranteed income you have (like pensions) and how much fluctuation your budget can withstand.

Know Your Setup

If you invest through a target-date fund, the fund company automatically rebalances as you approach its named year. Even so, it is worth checking the fund’s current stock/bond mix so you know how aggressive it still is.

If you manage a self-directed portfolio, rebalancing is entirely on you: shifting dollars out of overheated areas and into more defensive ones.

Rethink Your Stocks

As retirement nears, portfolios usually tilt away from high-octane growth stocks and toward steadier, dividend-paying companies. Growth names can still play a role, but no longer as the main driver.

Value-oriented companies—often established businesses with solid cash flow and reasonable prices—tend to swing less, and many send you regular cash in the form of dividends. That income can help cover monthly costs without constant selling.

Value Tilt Benefits

Many value stocks sit in sectors that hold up reasonably well in slowdowns because they provide everyday essentials—utilities, basic goods, transportation, and similar services. When markets wobble, these firms often experience milder price drops than fast-growing, hype-driven companies.

For near-retirees who need reliability, the ability to stay calmer during market swings can matter more than the possibility of outsized gains.

ETF Diversification

Exchange-traded funds (ETFs) are a simple bridge from concentrated risk to broad diversification. Instead of buying a single company, you buy a basket—sometimes hundreds—of holdings in one trade.

Many advisors lean heavily on ETFs because they can reduce the damage from any one company stumbling while keeping costs relatively low and trading flexible.

Income-Focused ETFs

For those about to rely on their portfolios for monthly bills, dividend or income-focused ETFs can be appealing. These funds target companies or strategies that emphasize regular distributions, sometimes even on a monthly schedule.

While they may not beat the market in every year, they can help turn volatile equity returns into a more dependable income stream alongside bond interest and Social Security.

Lean On Bonds

Rebalancing before retirement almost always involves shifting more money into debt securities: government bonds, highly rated corporate bonds and certificates of deposit. These investments pay known interest rates and tend to fluctuate less than stocks.

As you move through your 60s and into your 70s, many planners like to see 30%–40% of your portfolio in this steadier camp.

Locking In Yields

When interest rates are relatively high, locking in those rates with fixed-income investments can be a powerful move. Longer-term bonds and multi-year CDs can secure today’s yields even if rates slide later.

Some retirees build “bond ladders,” spreading maturities across several years so that part of the portfolio matures each year, providing both income and flexibility to reinvest.

Role Of Cash

Cash and cash-like accounts—high-yield savings or money market funds—play a quiet but crucial role. This is the bucket used for near-term expenses and surprises. A common guideline is to keep three to six months of essential spending in easy-access accounts.

That way, if markets fall, you are not forced to sell investments at a loss just to pay monthly bills.

During Retirement

Rebalancing does not stop once work ends. Checking your allocation at least annually helps you adapt to changing costs, health needs and market conditions. Some years you may discover that strong stock performance has pushed your equity share too high and decide to trim back.

Other years, rising expenses might require a slight tilt toward growth to maintain purchasing power.

RMD Opportunities

At age 73, required minimum distributions from many tax-deferred accounts begin. Those withdrawals can be more than just a tax obligation.

For retirees who do not need every dollar for current living, part of each distribution can be strategically reinvested—perhaps into a mix of dividend funds, additional bonds, or even gifts for future generations—while the rest covers spending.

Conclusion

Rebalancing ahead of and during retirement is less about clever market timing and more about aligning your money with the life you want to live. Gradually shifting toward income, diversifying across stocks and debt, and keeping a healthy cash cushion all work together to make your savings last.

Looking at your current portfolio, what is one concrete adjustment—more bonds, more cash, or more dividends—you could make this year to feel more secure?