I’m 61 years old and plan on retiring within the next 5 years — but the US election results have me spooked. What’s the best place to invest so I can still retire in time?

Resilience as a strategy

Let’s say you’re 61 and planning to retire within five years. Here’s how you can safeguard your retirement plans and stay on track. With retirement only a few years away, your focus should be on stability, capital preservation, and controlled growth. You’ll need to find the right asset allocation for this and rebalance your portfolio periodically.

Let’s look at some investment options suited to a short-term retirement horizon:

Simplified diversification

Target-date funds are specifically designed for people nearing retirement. They offer a diversified mix of stocks, bonds, and other assets, automatically adjusting to a more conservative allocation as you get closer to retirement. This option can simplify your investment strategy while helping manage risk.

Bonds and fixed-income securities for stability

Government bonds, high-quality corporate bonds, and other fixed-income securities offer reliable returns with less volatility than stocks. Treasury bonds are particularly stable, as they’re backed by the U.S. government and provide steady income.

Bonds can offer consistent returns and preserve your capital. Consider shorter-term bonds (maturing within five years) to align with your retirement timeline and minimize interest rate risk.

High-quality, dividend-paying stocks for income and modest growth

According to one popular rule of thumb, you minus your age from 110 to figure out how much of your portfolio should consist of equities. So at 61, less than 40% of your nest egg should be in stocks.

If you want to reduce stock exposure but still seek some growth, dividend-paying stocks with strong fundamentals can be a good choice. These stocks pay regular dividends, providing a source of income while maintaining the potential for growth. Look to sectors like utilities, consumer staples, and healthcare, which often offer stable dividend stocks that can weather market fluctuations. Dividend King stocks are those that have raised their dividends for more than 50 years in a row. You can find a list of them here.

High-yield savings accounts and money market funds for liquidity

For cash reserves, high-yield savings accounts and money market funds offer a safe, accessible way to earn interest. With interest rates falling, so too are the rates of high-yield savings accounts and certificates of deposit (CDs), but they’re still returning better than most conventional savings accounts, and they can provide liquidity for short-term needs or emergencies in early retirement. That allows you to cover expenses without tapping riskier investments.

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Staying on course

Managing retirement investments in uncertain times requires a thoughtful, steady approach. Here are some additional tips to stay on track:

• Avoid sudden changes: Markets often react strongly to elections but tend to stabilize. Avoid making impulsive decisions based on short-term market shifts, and stick to your long-term retirement plan.
• Review your risk appetite: As you approach retirement, your ability to take risks generally decreases. Consider gradually rebalancing your portfolio to include more low-risk assets.
• Diversify: By combining stocks, bonds, and cash reserves, you’re better prepared to handle different market conditions. Diversification reduces your reliance on any single investment’s performance, helping your portfolio stay resilient.
• Get professional help: A financial adviser can help ensure your portfolio aligns with your retirement goals and is adaptable to potential market shifts. They can also guide you through tax implications and other considerations essential to a solid retirement strategy.