Over the past decade, there has been a major shift in how people approaching retirement—and those already retired—are managing their investments. More than ever before, individuals are taking control of their own portfolios.
With the rise of online platforms, zero-commission trading, and easy access to information, many retirees have learned how to buy stocks and invest in ETFs with very low fees. What used to require a broker or advisor can now be done from a phone in just a few minutes. On the surface, this seems like a positive trend—and in many ways, it is.
Lower costs mean more of your money stays invested. ETFs provide diversification. And having control can feel empowering. Many retirees have become more educated, more engaged, and more confident in managing their financial future.
But there is a hidden risk that often goes unnoticed.
The Problem: Portfolio Drift
In many cases, retirees who are managing their own investments allow their portfolios to become unbalanced—especially during long bull markets.
And it usually doesn’t happen intentionally.
During a strong market run, stocks—especially growth stocks—tend to outperform other parts of a portfolio. If someone starts with a balanced allocation, such as 60% stocks and 40% conservative investments, that balance can shift over time. As stocks continue to rise, that 60% can quietly become 70%, then 75%, or even 80% of the portfolio. Meanwhile, the more conservative portion grows more slowly, becoming a smaller percentage.
This process is gradual and often goes unnoticed. Because the account value is increasing, everything appears to be working. There’s no immediate reason to question it. In fact, many investors feel rewarded for letting it ride. But what’s really happening is an increase in risk—often at the worst possible time.
Why It Matters in Retirement
By the time someone reaches retirement, their portfolio may be far more exposed to the stock market than they realize. What started as a balanced strategy has turned into a growth-heavy portfolio, simply because it hasn’t been rebalanced. And that becomes a problem when the market turns.
Sequence of Returns Risk
When a downturn eventually comes, an overweighted stock portfolio can decline more than expected. For retirees, this is especially dangerous because of something called sequence of returns risk—the impact of withdrawing income during a market decline.
If a retiree is pulling income from a portfolio that has dropped significantly, it becomes much harder for that portfolio to recover. What once looked like a strong, growing account can quickly become a source of stress.
The Importance of Structure
This doesn’t mean retirees shouldn’t manage their own investments.
It doesn’t mean stocks or ETFs are bad—far from it.
But it does mean that awareness and discipline are essential.
Having a strategy for rebalancing—whether it’s quarterly, annually, or based on percentage thresholds—can help maintain the intended level of risk. For many retirees, it may also make sense to carve out a portion of their portfolio that is not exposed to market volatility, especially for income needs.
The Bottom Line
At this stage of life, the goal is not just growth.
It’s stability.
It’s predictability.
It’s confidence.
Many retirees have done an excellent job adapting to the modern investing world—learning about ETFs, reducing fees, and taking control. But without regular rebalancing, even a well-built portfolio can slowly drift into something much riskier than intended.
And often, that risk only becomes visible when the market turns.
Because in retirement, it’s not just about how much you can make.
It’s about making sure what you have is positioned to last.