How to Position a Portfolio Near Retirement
For Investors near retirement de-risking a portfolio · Based on Nick Invests Boring-on-Purpose Portfolio Framework
// TL;DR
If you're 5–15 years from retirement, this framework helps you de-risk without abandoning growth or overpaying in fees. Start by auditing every fund's expense ratio — an active target-date fund at 0.68% versus a 12/100 index costs you real money on a large balance. Right-size the 20% bond sleeve, which is now genuinely productive at 4–4.5% yields (stick to intermediate bonds and T-bills, not 30-year Treasuries). Ignore scary valuation headlines, measure against the median rather than the mean, and resist the urge to exit during volatility.
How should my allocation change as I approach retirement?
The 60/20/20 core still works, but the 20% bond sleeve does far more work now. With a shorter horizon, BND at 4–4.5% yield is meaningfully productive stabilisation, not the resented ballast it was in the low-rate 2010s. The framework's bond advice for those near retirement is specific: own intermediate bonds and Treasury bills only — avoid 30-year Treasuries, which carry outsized interest-rate risk you don't want late in the game.
You don't need to abandon equities. A bad market early in retirement still recovers, and equities remain the growth engine that protects against outliving your money.
Am I overpaying in fees without realising it?
Quite possibly. Fees are a silent subtraction — they never appear as a line item, so they're easy to miss for years. On a large near-retirement balance, an active target-date fund at 68/100 versus a 12/100 index equivalent — same glide path, five to six times the fee — quietly hands a fund company the equivalent of a used car every five years of retirement.
Spend four minutes auditing every holding's expense ratio. Look for the 'index' vs 'active' label and always choose index. Aim for a blended portfolio cost near 4/100 of 1%. In a taxable account, factor in capital gains before switching; in tax-advantaged accounts, you can usually swap freely.
Should I sell out because valuations or the market look scary?
No — this is the most expensive mistake near retirement. Any plan to exit when things get scary and re-enter once things calm down is mechanically a plan to hold cash on precisely the days that pay you. Seven of the 10 best days in a 20-year window occur within two weeks of the 10 worst. Missing just the 10 best days out of ~5,000 can halve your ending wealth.
Don't over-weight scary signals. The Shiller CAPE above 40 looks alarming, but the forward P/E near its own median suggests normal conditions. They measure different things and neither is definitive. You do not get your recovery without sitting through the part that made you want to leave.
How do I know if my balance is actually on track?
Measure against the median, not the mean. The average 401(k) (~$168,000) and mean Fed figure (~$334,000) are bent upward by a small number of enormous accounts and have nothing to do with your situation. The medians — ~$44,000 and ~$87,000 — tell a truer story. Better still, compare against what your own plan can realistically compound to given your contributions and time horizon.
Do I still need international exposure this late?
Yes. The 20% international sleeve isn't a bet against America — it's a premium paid on never needing to be right. The S&P 500 returned roughly 0% over 2000–2009, and Japan's market took 35 years to reclaim its 1989 peak. A concentrated home-country portfolio right before you start drawing income is exactly the risk diversification exists to soften.
What about gold or crypto as I de-risk?
Keep speculations at the edge of the plate, capped at 5% and sized as if they could go to zero. If you want gold for stability, use IAU or GLDM (9–10/100), never GLD (40/100). Don't treat Bitcoin as a safe store of value — its 2025 behaviour (-6% while gold rose 66%) shows it isn't a substitute for stable assets near retirement.
Next step: Audit every fund you hold for fees this week, confirm your bond sleeve uses intermediate bonds and T-bills, and commit in writing to making no changes during the next market downturn.
// FREQUENTLY ASKED QUESTIONS
Should I move everything to cash or bonds before I retire?
No — a fully de-risked portfolio risks outliving your money, since retirement can last decades. Keep the equity engine running with something like the 60/20/20 core, letting the 20% bond sleeve provide stability at today's productive 4–4.5% yields. Going all-cash also means missing the market's best recovery days, which cluster right after the worst ones.
Why avoid 30-year Treasuries near retirement?
Because long-duration bonds carry high interest-rate risk — their prices swing sharply when rates move, which is the opposite of the stability you want late in your investing life. The framework specifically recommends intermediate bonds (via BND) and Treasury bills (via SGOV) instead, which capture today's ~4–4.5% yields with far less volatility.
My balance is below the average — should I panic?
No, because the average is misleading. The mean 401(k) is inflated by a handful of enormous accounts; the median is around $44,000. Compare against the median or, better, against your own realistic plan. Panic often leads to the costliest behavioural mistakes — chasing returns or exiting during downturns. Focus on fees, allocation, and staying invested.