At 10 years before retirement, investment priorities often begin to shift. The focus typically moves from maximizing growth to protecting accumulated savings while managing risk and preparing for future income. Portfolios at this stage commonly combine growth-oriented assets with stabilizing investments to help limit volatility and support a smoother transition into retirement spending.
No matter how many years you have until retirement, a financial advisor can help you review your investments to balance growth, manage risk and prepare for future income needs.
Investing 10 Years Before Retirement: Goals and Time Horizon
Unlike investing earlier in your career, when time can help absorb market volatility, investing 10 years before retirement requires more intentional diversification and risk control. You are close enough that significant losses could materially impact retirement readiness, but you still have time to benefit from market growth.
A targeted investment plan for this horizon typically blends growth assets, income-producing investments, and more conservative holdings. Many advisors recommend gradually reducing exposure to highly volatile assets while increasing allocations to bonds, dividend-oriented stocks and liquid instruments.Â
For example, portfolios might shift from a 70% equity allocation in earlier years to something more balanced, such as 50%–60% in equities and 40%–50% in fixed income or conservative alternatives, depending on risk tolerance and individual goals.
Here, diversification helps reduce the impact of downturns in any single market segment. Rebalancing back to target allocations periodically also keeps your strategy aligned with your retirement timeline.Â
1. Diversified Equity Funds
Diversified equity funds pool money from many investors to buy a broad mix of stocks. These can be total market funds, S&P 500 index funds, or international equity funds. Even 10 years before retirement, maintaining some exposure to equities is important because stocks generally offer higher long-term returns than other asset classes. A portfolio that abandons equities too early may struggle to keep up with inflation or sustain purchasing power over a 20–30 year retirement.
Opportunities
During long periods, equities have delivered solid returns. For example, the S&P 500 has historically returned about 10% annualized over several decades (though past results don’t guarantee future performance). This potential growth helps portfolios keep pace with inflation and build wealth up to and into retirement.
Risks
S&P 500 index funds are subject to market volatility. Periods such as the 2008 financial crisis or the pandemic-related drop in 2020 show how quickly equity values can fall. With a shorter time horizon before retirement, these declines can be harder to recover from, increasing the impact of timing and sequence of returns.
2. Dividend-Paying Stocks and Funds
Dividend-paying stocks are shares of companies that distribute part of their earnings to shareholders, while dividend funds target companies with a history of regular dividends, combining income and growth appeal.
Opportunities
Dividend stocks can provide a steady income stream alongside capital appreciation. Over long periods, dividend reinvestment has historically contributed a significant portion of total stock returns. And dividend-paying stocks in the S&P 500 have often outpaced non-dividend payers in total return when dividends are reinvested. Not to mention, from 1989–2025, Dividend Aristocrats outperformed the S&P 500 by 66.7% during down months for the broader market. 1 Â
Risks
Dividends are not guaranteed and can be reduced or eliminated during downturns. Dividend-oriented market sectors, such as utilities and consumer staples, may also underperform in strong growth phases.
3. Bonds and Bond Funds
Bonds represent loans to governments, municipalities or corporations and are often used to provide income and reduce risk within a portfolio. Bond funds, on the other hand, invest in a diversified mix of bonds rather than a single issue. This asset class becomes increasingly important as the retirement date approaches. The primary role of bonds is to reduce volatility and provide more predictable income relative to stocks. Allocations commonly increase into the 30%–40% range, depending on risk tolerance, helping cushion portfolio declines during equity market downturns.
Opportunities
Historically, the Bloomberg U.S. Aggregate Bond Index has returned around 4%–6% annually over multi-decade periods (averaging 4.79% from 1928 to 2024). While this is lower than equities, bonds tend to move inversely to stocks, and can provide stability and income. As retirement nears, bonds help dampen volatility and provide predictable cash flow through interest payments.
Risks
Bonds are sensitive to interest rate changes. When rates rise, bond prices typically fall. Inflation can also eat into your returns if yields don’t keep pace with rising costs. Longer-duration bonds face greater price risk in rising rate environments.
4. Tax-Advantaged Retirement Accounts and Catch-Up Contributions
Even 10 years before retirement, maximizing contributions to tax-advantaged accounts like 401(k)s, traditional IRAs and Roth IRAs remains crucial. Individuals age 50 and older are eligible for catch-up contributions, allowing additional savings beyond standard limits.
In 2026, employees can contribute up to $24,500 to a 401(k), with an increased limit of $32,500 for those age 50 and older. Savers between ages 60 and 63 are also eligible for an enhanced “super catch-up” contribution of as much as $11,250, bringing their total possible annual contribution to $35,750. Meanwhile, IRA contribution limits rise to $7,500, or $8,600 for individuals age 50 and above. 2
Opportunities
Tax-deferred accounts allow investments to grow without immediate tax drag, while Roth accounts offer tax-free qualified withdrawals. For example, a Roth IRA converted years before retirement gives tax-free growth and withdrawals in retirement, which can improve tax flexibility. Not to mention, catch-up contributions are especially valuable when you’re 10 years out from retirement.Â
Limits and Risks
Contribution limits cap how much you can shelter each year, and future tax law changes may affect withdrawal rules or tax treatment. Additionally, required minimum distributions (RMDs) apply to traditional accounts starting at age 73 under current law, which can affect long-term planning.
5. Cash and Capital-Preservation Investments
Cash alternatives include high-yield savings accounts, money market funds and certificates of deposit (CDs). These investments offer stability and liquidity, but lower long-term returns. Cash and short-term instruments are often used to fund near-term needs, build an emergency buffer and prepare for early retirement expenses.Â
Opportunities
Cash and capital-preservation investments preserve value by limiting exposure to market swings and keeping funds readily accessible. This makes them useful for near-term needs, such as upcoming retirement expenses or emergencies, while high-yield savings accounts can generate interest on idle cash in the short term.
Risks
Returns on cash and cash equivalents tend to be low when compared with stocks and bonds, and may not keep up with inflation. Over-allocating to cash late in the accumulation phase can hinder long-term growth.
How a Financial Advisor Could Help With an Investment Plan
At 10 years from retirement, a financial advisor can help you build a targeted investment plan that separates money needed for near- and mid-term spending from assets that are intended for longer-term growth and income later in retirement. This typically involves identifying expected spending needs over the next five to ten years and setting those funds aside from market-driven investments.
An advisor can also help you determine where to hold near-term funds so they remain accessible and less exposed to market swings. This may involve comparing cash and short-duration options, such as high-yield savings accounts, money market funds or short-duration fixed-income investments, based on liquidity, stability and interest-rate sensitivity.
Managing downside risk becomes increasingly important as retirement approaches. A professional advisor can help with diversification strategies, setting rebalancing guidelines, and stress testing your investment portfolio under different market conditions. This can reduce the chances of significant losses during the final years before retirement.
Tax planning is another area where advisors add value. Coordinating tax-advantaged accounts, optimizing Roth conversions, managing capital gains, and planning for RMDs are all complex decisions that can benefit from expert insight. Advisors can also help you review and update your investment approach as your personal situation, tax rules and market conditions change.
Bottom Line
Portfolios at 10 years before retirement often combine equities for continued growth with bonds and other stabilizing assets to help limit volatility. Income-oriented investments, modest real estate exposure and capital preservation tools can support cash flow planning as retirement nears. Tax-advantaged accounts and careful cash management also take on greater importance, since contribution choices and liquidity can influence both flexibility and after-tax income.
With retirement coming closer, the way assets are positioned for future withdrawals becomes a central consideration.
“As you get closer to retirement, it’s important to consider how your investments are structured to allow you to take withdrawals without incurring too much risk,” said Brandon Renfro, CFP®, RICP, EA.
Brandon Renfro, CFP®, RICP, EA, provided the quote used in this article. Please note that Tanza is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.
Retirement Planning Tips
- A financial advisor can help structure and adjust a portfolio to balance growth, stability and cash flow needs as retirement approaches. Finding a financial advisor who can help doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to know how much your nest egg could grow over time, SmartAsset’s retirement calculator could help you get an estimate.
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