Investing Myths Retirees Still Believe

Investing Myths Retirees Still Believe

Avoid five common retirement investing mistakes involving market timing, CDs, cash, stocks, and dividends by matching your investments to what your money needs to do.

Some of the biggest investing mistakes I see retirees make don’t begin with a reckless investment or a hot stock tip. They begin with an idea that sounds completely reasonable.

The market looks expensive, so shouldn’t I wait for it to come down?

CDs are paying a good interest rate, so why take investment risk?

I’m retired now, so shouldn’t I get out of stocks?

These ideas are tempting because there are circumstances where parts of them can make sense. The mistake comes when we take one concern—a market decline, changing interest rates, the need for income—and build the entire retirement portfolio around it.

After helping hundreds of people retire, I’ve found that a more useful starting point is to ask what you need your money to do and when you need it to do it.

This week on the “Retire Today” podcast I answer 5 different listener questions from retirees related to investing. If you’ve got a question, make sure you fill out the section on the right at JeremyKeil.com 

Question #1: Should I Move to Cash While the Market Is Expensive?

“The market seems really expensive right now. Should I move everything in the cash and wait for the next correction before investing again?”

The appeal is obvious. Sell while prices are high, wait for the correction, then buy back at a lower price.

The problem is that this requires you to make two successful timing decisions: when to get out and when to get back in.

We don’t know whether a market that looks expensive today will become cheaper next month or more expensive next year. We do know that stock markets will have periods when they rise and periods when they fall.

That’s why I think the more useful distinction is between short-term money and long-term money.

If you’re investing money you’ll need soon, short-term market volatility matters considerably. That money shouldn’t necessarily depend on the stock market cooperating at exactly the moment you need to withdraw it.

But if the money is intended for much later in retirement, today’s market valuation doesn’t suddenly turn a long-term need into a short-term one.

The mistake is allowing a prediction about the market’s next move to change the purpose of the money.

QQuestion #2: Why Not Put All My Retirement Money in CDs?

“CDs are paying almost 5% right now. Why should I just put all my retirement money into CDs and live off the interest?”

The listener submitted this question when CD rates were somewhat higher. As I recorded the answer in August 2026, I noted that rates were closer to 4%*.

That change itself helps illustrate the problem.

A CD can be entirely appropriate for money that has a short-term job. But today’s CD rate doesn’t tell you what will be available when that CD matures.

I remember attending an investment conference after the Great Financial Crisis. The S&P 500 had fallen by more than 50%** and eventually recovered. But another dramatic change had occurred at the same time: CD interest rates collapsed.

Rates remained extremely low for years.

Someone who built a long-term retirement income strategy around the interest available from CDs before that decline faced a very different environment when those CDs matured.

The lesson isn’t that CDs are bad. It’s that short-term interest rates can change, too.

If a portion of your retirement money has a short-term purpose, CDs may be one tool worth considering. But money intended to support needs decades into the future has a different job. Don’t confuse an attractive rate available today with a long-term retirement strategy.

Question #3: Should I Still Own Stocks After I Retire?

“I’m retired now. Should I still own stocks, or is it finally time to get out of the stock market?”

I think this question comes from a misconception about the retirement finish line.

People spend decades investing to retirement and sometimes forget that they’ll also need to invest through retirement.

Imagine you’re 32 and expect to retire at 62. You have a 30-year time horizon, so you’d probably think of at least some of your investments as long-term money.

Now imagine you’re 62.

Your paycheck may have stopped, but that doesn’t mean all your money suddenly became short-term money. If you’re married, one of you could still be living decades from now. Some of the money in your portfolio may not be needed for 20 or 30 years.

That is still long-term money.

At the same time, retirement creates a short-term need that the 32-year-old may not have. You’re now withdrawing money rather than continually adding to your portfolio.

That’s why the question shouldn’t simply be, “Should retirees own stocks?”

A better question is:

When will I need this particular money?

Money you expect to spend relatively soon should be treated differently from money intended to support you much later in retirement.

Your potential longevity is therefore one of the most important numbers in your investment plan. I reference the Longevity Illustrator for exactly this reason. Before deciding how much of your portfolio is truly “long-term,” it helps to understand just how long retirement could last.

Question #4: How Much Cash Should I Keep in Retirement?

“How much cash should we actually keep once we’re retired?”

Before retirement, you’ve probably heard the familiar advice about keeping several months of expenses in an emergency fund.

That framework often centers on one particular risk: What happens if I lose my job?

Retirement changes the question because you don’t have a job to lose.

Now, I want to think about cash in terms of its job within the retirement plan. How much money do you want available for short-term spending and unexpected needs without depending on what the stock market happens to be doing?

Rather than automatically thinking in terms of months, retirement may require thinking in terms of years. That doesn’t mean everyone should hold several years of expenses entirely in cash. Your short-term allocation might include cash along with other investments or financial products appropriate to the purpose you’ve identified.

The right amount will differ from one retiree to another.

But if you decide that a certain amount really does need to be cash, treat it as cash.

I’ve had someone describe Apple stock as their “cash account.” It may have performed well for them, but stock isn’t cash. If the purpose of those dollars is to be available without day-to-day market loss, don’t reach for additional return by changing the nature of the money.

At the same time, don’t ignore what your cash is earning. I noted that high-yield savings accounts were available around 3.5% or higher when I recorded this***. If you’re going to maintain a meaningful cash balance, compare the cash options available rather than automatically leaving the money in an account paying substantially less.

Question #5: Aren’t Dividend Stocks Safer Than Index Funds?

“Wouldn’t I be safer owning dividend stocks instead of index funds? Since then I’m getting income at least.”

Receiving a dividend can feel reassuring in retirement because you can see income arriving without selling shares.

But just because a stock has a dividend doesn’t make it inherently safe. Concentrating a large portion of a portfolio in dividend-paying stocks can create concentration risk by making more of the portfolio dependent on one investment style or market segment

Here’s a story to illustrate this idea: I started as a financial advisor in 2003 in the Milwaukee area, where GE was a major employer. I met plenty of people who owned GE stock as its value declined. A common response was that they weren’t worried because they could rely on the dividend.

Then GE cut its dividend dramatically.

A company’s history of paying dividends doesn’t guarantee that the dividend will continue unchanged. And concentrating heavily in just one dividend-paying stock or exclusively in this type of stock creates another issue: you’re making a substantial portion of your investment strategy dependent on one particular stock or type of stock performing the way you expect.

There will be periods when dividend stocks perform relatively well and periods when growth stocks perform relatively well. We don’t get to look 20 years into the future and determine today’s winner.

That’s the purpose of diversification.

Diversification doesn’t mean nothing in your portfolio will decline. It means you’re not designing your entire retirement around one prediction being correct.

Don’t Build Your Portfolio Around One Risk

These five questions sound different, but I see the same investing mistake underneath them.

Someone worries about a stock market decline, so they want to move everything to cash.

Someone sees attractive CD rates, so they want to move everything into CDs.

Someone worries about inflation and concentrates on inflation-protected investments. Someone else worries about interest rates and looks heavily toward annuities. Another retiree wants income and decides dividend stocks should dominate the portfolio.

Each decision is attempting to address a legitimate concern.

The problem is that retirement doesn’t expose you to only one concern.

Markets can decline. Inflation can rise. Interest rates can change. Income needs can change. And your retirement may last considerably longer than you expect.

That’s why I don’t believe successful retirement investing is primarily about predicting which risk will matter most next year.

Start by determining when you’ll need your money and what you need it to accomplish. Then build your investments around those needs rather than around your predictions.

That’s a process you can continue using no matter what the market does next.

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About the Author:

Jeremy Keil, CFP^®, CFA is a retirement financial advisor with Keil Financial Partners, author of Retire Today: Create Your Retirement Income Plan in 5 Simple Steps, and host of the Retire Today blog and podcast, as well as the Mr. Retirement YouTube channel.

Jeremy is a contributor to Kiplinger and is frequently cited in publications like the Wall Street Journal and New York Times.

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Additional Links:

Buy Jeremy’s book – Retire Today: Create Your Retirement Master Plan in 5 Simple Steps

LongevityIllustrator.org

Build Your Retirement Master Plan in 5 Simple Steps – 5StepRetirementPlan.com 

* CD Rates as of August 28, 2026 hovering around 4% return, source: “CD Interest Rates Forecast: Will CD Rates Go Up in 2026?” by Taylor Medine, Forbes

** source: “Every Major Stock Market Correction Since 1950 & How Long Recovery Took” by Plus500

*** High-Yield savings account return rates available around 3.5% or higher as of August 28, 2026, source: “Today’s top high-yield savings rates: up to 4.50% on Aug. 28, 2026” by Glen Luke Flanagan, Fortune 

Connect With Jeremy Keil:

• Keil Financial Partners
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• LinkedIn: Keil Financial Partners
• YouTube: Mr. Retirement
• Book an Intro Call with Jeremy’s Team

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