Nearing Retirement? 3 Steps To Take After The Stock Market’s Recent Rally

Key Points

• The S&P 500 is up over 16% year to date after recovering from earlier losses.

• The Fed is expected to cut rates to 3.50%-3.75% on December 10.

• Near-retirees should hold one to two years of cash to cover expenses.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

When the Federal Reserve announced its first interest rate cut in September, the stock market was quick to react.

That wasn’t surprising. What was surprising, though, was the extent to which stocks had dipped in the preceding months amid persistent inflation worries and economic uncertainty.

2025 has been a volatile year for investors on the whole, but particularly for those on the cusp of retirement.

It’s never a great time to see your portfolio value decline. But when you’re gearing up to end your career and live off of your investments, a stock market pullback can be extremely anxiety-inducing.

But on December 10, the Federal Reserve is widely expected to deliver its third consecutive rate cut of the year—lowering the benchmark rate to 3.50%-3.75%, which has already begun sending the market moving the other way in hopes of easier borrowing and sustained growth.

As of this writing, the S&P 500 has not only wiped out its losses from earlier dips but is up more than 16% year to date. That gives investors an opportunity to recover from the year’s turbulence and set themselves up to better weather upcoming storms.

If you’re nearing retirement, now’s an especially good time to make some strategic portfolio moves. But act quickly, since we don’t know how long this rally is going to last.

1. Rebalance

If you’re too heavily invested in any specific company or segment of the market, you’re doing your retirement portfolio a disservice. Now that the market’s in recovery mode, it’s a good time to make sure you’re appropriately diversified. And if not, you can make changes while stocks are in a decent place.

That could mean shifting out of certain market segments for better variety. It could also mean dumping stocks that are more speculative in favor of recession-proof consumer goods stocks that pay dividends.

2. Cash out gains

Many investors had gains to capture in their portfolios at the start of 2025 following two blockbuster years for the S&P 500. Now that the index has recovered its value, it could be a good time to cash out some of those gains for better protection.

When you’re about to retire, it’s a good idea to stockpile enough cash to cover one to two years’ worth of bills. If you didn’t get an opportunity to do that, you have a chance now. And given the potential for more volatility as the new year approaches, it could be wise to favor the higher end of that range.

3. Shift into more stable assets

Earlier in the year, you may have felt comfortable having a good 60% to 70% of your portfolio in stocks as a near-retiree who may still have plans to work another year or two. But given the events of the past month, a safer bet could be to rethink your asset allocation and move out of stocks a bit more. Replacing stocks with bonds could give you more peace of mind.

If you’re close to retirement but want to work another year or two, don’t assume you’ll have that option. You may want to move some assets into bonds whose interest you can tap for income as needed. And within the stock portion of your portfolio, you may want to make sure that at least some of your holdings are reliable dividend-payers.

The more income your portfolio produces, the better protection you have against market downturns.

The New Report Shaking Up Retirement Plans 

You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.

The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.