Why ‘Playing It Safe’ in Retirement Can Still Lead to Financial Trouble

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Retirement Share Share Close Mail Page URL https://money.com/playing-it-safe-retirement-mistake/ Link copied! Why 'Playing It Safe' in Retirement Can Still Lead to Financial Trouble By: Marc Guberti Marc Guberti Marc Guberti is a personal finance writer who hosts Breakthrough Success, a podcast where he teaches listeners how to grow their businesses and achieve personal transformations. Has also written: Why Some Retirees Lock In Smaller Social Security Checks — and How to Avoid It Why Smart Retirees Are Embracing Passive Income Streams The 10-Minute Social Security Checkup That Could Boost Your Lifetime Income How To Stay Healthy and Wealthy in Retirement This Overlooked Social Security Rule Could Cost You Thousands in Retirement See full bio Published: Feb 11, 2026 4 min read Getty Images On the surface, it looks much less risky to keep your money in certificates of deposit (CDs) and a high-yield savings account than to invest it in the stock market. But while stocks can be volatile, keeping your money on the sidelines isn’t risk-free. Sticking to cash and cash equivalents may make you feel more comfortable in retirement, but it’s important to invest some of your money so it can grow and beat inflation. Must ReadExperts are Bullish on Gold — Here's How to Get InRetirees: How a Small Gold Allocation Can Soften Losses When the Stock Market WobblesWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage Erosion from inflation High-yield savings accounts and CDs certainly have a place in retirement planning, but they won’t keep up with inflation like riskier assets will. And keep in mind that even if the annual percentage yield (APY) you receive is slightly higher than the rate of inflation, the interest you receive is treated as taxable income. Inflation doesn’t even have to soar like it has in recent years to have a negative impact on your finances. Consumer prices quietly tick up over time, eating away at your purchasing power. Stocks, bonds and other investment assets give investors the opportunity to outperform inflation. Before going all-in on cash, consider the opportunity cost. Pet Protection: See Lemonade's pet insurance options — save and protect your cat or dog from high vet bills The power of compound growth Inflation aside, you also want your portfolio to grow so it can cover your long-term goals and unexpected costs in retirement, such as increased health care costs. Retirees shouldn’t go all-in on stocks, but investors with no growth-oriented assets run the risk of outliving their nest eggs. These people may have to significantly downsize, return to work or make other difficult decisions. You can gradually reduce your stock exposure as you get older, but it’s still valuable to have assets that are knwon to beat inflation. Gold and other precious metals can be valuable supplementary investments to achieve that objective.

Free Stock Opportunity: Get up to $1,000 in stock with a new, funded SoFi Invest account Balance is key The best retirement portfolios don’t commit to just protection or just growth. You need the proper balance of both types of assets in your nest egg to avoid losing money due to inflation and to make yourself less vulnerable to a stock market downturn. Balancing a portfolio between stocks, cash, bonds and other assets requires knowing your financial situation and planning accordingly. Financial advisors typically recommend keeping enough cash handy to cover three to six months’ worth of your living expenses, and boosting that to one to two years' worth once you’re in retirement. As for your mix of stocks, bonds and other assets, the optimal balance will depend on your risk tolerance, financial situation, time horizon and goals. Here’s an example from Charles Schwab of how you can shift your portfolio allocation over time. People aged 60-69 may want to have a moderate portfolio of 60% stocks, 35% bonds and 5% cash or cash equivalents. When they turn 70, they may want to adjust that to 40% stocks, 50% bonds and 10% cash. Then when they turn 80, they can opt for a conservative portfolio of 20% stocks, 50% bonds and 30% cash. Save Smarter: Take control of your money with the Rocket Money budgeting app Must ReadExperts are Bullish on Gold — Here's How to Get InRetirees: How a Small Gold Allocation Can Soften Losses When the Stock Market WobblesWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage