Date: April 29, 2024

Retirement Strategy: Winning with a Defensive Investment Plan

Market fluctuations can often make you feel like you’re at the mercy of Wall Street, but it doesn’t have to be that way. Unless you have a crystal ball (mine broke 50 years ago), you can’t accurately predict every little market swing (for sure, Wall Street cannot) during periods of market volatility. You should be reminding yourself to focus on “controlling the controllables.”

In other words, concentrate on aspects of your wealth you can manage, like making smart, data-driven decisions vs. emotional moves that could impact your long-term results.

As a fee-only fiduciary financial advisor in New Haven, CT, we believe the best investment approach for achieving retirement goals involves a defensive and some offense. We help successful individuals build retirement plans focused on stability and protecting the principal you’ve worked hard to accumulate over the years.

Our blog will look at four defensive retirement strategies that can help overcome the market’s unpredictability.

Diversify with Defensive Assets

You can be more defensive with your retirement assets through diversification using a balanced approach of lower-risk assets. Integrating bonds and cash equivalents alongside growth-oriented investments like stocks can bring more balance to your investment portfolio.

Think of this strategy as a way to smooth out the ups and downs of the market, making your retirement savings more resilient against dramatic changes in the economy.

 Examples of defensive investments can include blue chip stocks with significant dividends, corporate and government bonds, income-producing real estate, and money market funds. A more balanced approach has the potential to be less volatile and produce more stable rates of return.

Following are some diversification strategies you can use to diversify your portfolio:

  1. Consider your comfort level with investment risk and your time horizon until you need the assets or income from the assets. How you feel about risk will guide how much of your portfolio should be allocated to defensive assets.
  2. Select a mix of high-quality corporate bonds, government securities, and money market funds. Consider short-term bonds for their reduced volatility and treasury securities as a haven. In theory, governments usually do not go out of business.
  3. While defensive assets can stabilize your portfolio, higher-quality equities are important for growth. Find a balance that suits your risk tolerance and time horizon until retirement.
  4. The market movement will change your asset allocation over time. For example, stocks outperform bonds, so you have a bigger allocation to stocks. Review your allocations quarterly and rebalance them every quarter.
  5. Unless you have the time, interest, and knowledge to make your own decisions, you should consider working with a fee-only fiduciary advisor in New Haven who can provide personalized guidance tailored to your financial needs and goals.

Quality Stocks with Stable Dividends

Another defensive tactic for safeguarding your retirement savings is using quality stocks, sometimes called blue chips, with a history of dividend growth. These stocks typically belong to big, older companies with a history of consistent profitability, stable management, and market dominance. You should want a balance between income generation and capital appreciation, which is critical for maintaining financial stability during retirement.

There’s a dual benefit to this strategy:

  • The inherent stability of such companies can act as a buffer against market volatility, helping to preserve the market value of your investments.
  • Regular dividend payouts generate a more dependable stream of income, which can be particularly valuable in retirement when you seek assets that produce income.


Watch our founder, Paul Schatz, discuss inflation vs. high prices. 

Increase Your Fixed Income Allocation

As you near retirement, consider shifting a more significant portion of your portfolio toward fixed-income strategies. The key advantage of this strategy lies in its ability to offer more consistent returns and lower volatility compared to portfolios with higher allocations to equities.

By allocating more assets to fixed income, you effectively cushion your retirement savings against market fluctuations and economic downturns. This is because fixed-income investments can have a lower correlation with stock market performance, so they hold their value better during periods of stock market volatility. This is particularly true when the Federal Reserve lowers interest rates to promote growth. 

Why do bonds produce more stable returns? More of their returns are based on interest payments; you can always hold them to maturity.

The steady flow of bond interest payments is a way to fund your cost of living during retirement years.


I Bonds – Should You Own Them? Watch our short video.

Time Your Social Security Benefits

Timing for when you start receiving Social Security benefits is another defensive move you can make as part of your financial plan for your retirement years. Why?

Choosing the right moment to begin receiving benefits can significantly impact your overall income during retirement and financial security later in life. 

If you opt to start receiving benefits before your full retirement age (67 if you were born in 1960 or later), your monthly benefit will be reduced. On the other hand, delaying benefits beyond your full retirement age can increase your monthly benefits up to age 70.

While starting benefits earlier can provide immediate income based on need, it will reduce the total benefit amount paid to you – if you live a long time. Delaying benefits increases the monthly payment amount, offering a higher total income over your retirement years. This strategy can safeguard against outliving other retirement savings by maximizing the guaranteed income you’ll receive later in life.

When deciding when to start Social Security benefits, it’s important to consider your health, family health history, financial needs, and other sources of income. For many, waiting until at least full retirement age is a financially sound choice, helping ensure their later years are more financially secure.

About Heritage Capital

You’ve dedicated years to building your wealth. As you approach or enter retirement, your assets must work as hard as you have in the past.

While many financial advisors are ready to assist, not all prioritize your financial success over their own.

Heritage Capital stands out as an acclaimed, personalized wealth management firm driven by a commitment to your financial prosperity during retirement. 

Read more about our distinctive approach below.

Starting retirement leaves little room for error. It’s imperative to get things right from the start. Heritage Capital has guided individuals through retirement challenges and solutions for over thirty years. 

Your investments are managed by our portfolio manager, Paul Schatz, a highly regarded specialist seen on CNBC and Fox Business News.

Our focus has been clear for all those years: Grow and safeguard our clients’ wealth as they enter retirement. It is very important to get it right the first time. Connect to learn more about our defensive retirement strategies.

plan a bulletproof retirement


Paul Schatz, President, Heritage Capital