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

When the Trump administration announced its tariff policies in early April, the stock market was quick to react.

That wasn’t surprising. What was surprising, though, was the extent to which stocks plummeted given that the news was expected.

April was a tough month for investors on a 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 crash can be extremely anxiety-inducing.

But on May 12, the United States and China agreed to temporarily lower tariffs on one another, which sent the market moving the other way.

As of this writing, the S&P 500 has officially wiped out its losses from April’s decline and is up a tiny notch year to date. That gives investors an opportunity to recover from April’s events 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 prior to April, you have a chance now. And given the potential for more volatility as the year goes on, 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.

Also, while there was a temporary pause in the tariff battle, the war isn’t over. Things could get uglier and a recession could ensue.

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.

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