A 40-year Wall Street veteran warns that the biggest retirement mistakes aren't flashy gambles but quiet, emotional decisions. Panic selling, chasing performance, and over-concentrating in one sector are far more dangerous than any single market crash.
To protect your portfolio, stay invested but avoid all-cash positions. Sequence-of-returns risk-a market drop in early retirement-can permanently damage your savings. A reasonable allocation for someone five to ten years out from retirement is 50% to 70% in stocks (U.S. and international), with the rest in bonds and cash.
Build a cash bucket of one to three years of living expenses to weather downturns without selling stocks at the bottom. Consider a low-cost target-date fund for a hands-off approach. Rebalance annually and ignore market noise.
The boring portfolio-diversified, periodically rebalanced, mostly ignored-beats the exciting one over 30 years.