The first 5 years of retirement decide everything — especially with Trump in the White House. Protect your next egg Laura Grande and Vishesh Raisinghani Mon, October 12, 2026 at 7:35 AM EDT 9 min read GC=F -0.50% Photo by Kent NISHIMURA / AFP via Getty Images Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Even if you've spent decades carefully planning your retirement, the first five years can have an outsized effect on how long your savings last.
These are sometimes called the "go-go" years, when you have your health and the will to explore. But the first few years of retirement can also be tricky.
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Your early retirement years are when you're likely to be spending the most money — while also being most vulnerable to market downturns.
A market downturn can do real damage when you're withdrawing money to cover your bills, and decisions about Social Security and taxes can affect how much money you have left to live on for the rest of your retirement, which could last decades.
Here are some things retirees might want to watch out for during those early years, particularly as markets react to economic uncertainty and policies under President Donald Trump.
As of 2024, the average retirement age was 64.6 for men and 62.6 for women, according to the Center for Retirement Research at Boston College (1). In other words, most people retire in their early to mid-60s, right about when Social Security eligibility begins.
Depending on your age, claiming too early can reduce lifetime disposable income by a median of $182,370, according to a 2022 working paper from the National Bureau of Economic Research (2).
Another factor to consider at this age is market risk. A severe downturn in the first few years of retirement could derail your long-term plans if you're relying on a market-based portfolio. That's because a big drop in the value of your stocks and bonds, coupled with your steady annual withdrawals, could permanently diminish your nest egg.
Financial experts call this phenomenon the sequence of returns risk, according to Northwestern Mutual (3).
Markets can also turn quickly. For instance, the S&P 500 and Nasdaq hit record highs on Oct. 6 (4), then fell by 0.5% and 1.25%, respectively, two days later on Oct. 8 (5). Rising oil prices, tensions in the Middle East and concerns about inflation and interest rates were all weighing on investors.
Amid the market volatility, the timing of a downturn can be especially important for many retirees. If stocks fall and you need to sell investments to pay the bills, you could end up using up more of your savings than you planned.
Read More: Vanguard reveals what's coming for U.S. stocks — and it could be bad news for this group of investors
One way to ride out a market downturn is to keep some money in cash for living expenses, so you're not forced to sell investments when prices are down. This is sometimes called a cash bucket strategy, which gives you a cushion to draw on if the market takes a hit.
How much you might want to keep depends on your expenses, retirement income and risk tolerance. Some retirees keep several months of essential costs in an emergency fund, while others set aside enough to cover planned withdrawals during a downturn.
Cash offers flexibility, but keep too much on the sidelines and you could miss out on investment growth. To offset this potential issue, it's always a good idea to shop around for cash accounts with attractive interest rates.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base rate APY of 3.55% through program banks. With a new client boost and direct deposit incentive, referred clients can earn up to a 4.55% APY.
That's 10 times the national deposit savings rate, according to the FDIC's September report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.
If you can leave some savings untouched for a set period, certificates of deposit (CDs) are another option. They typically pay a fixed rate for a set term, although withdrawing money early may trigger a penalty.
Using a strategy like the CD ladder, with multiple CDs set up to mature at different times, can be a way to avoid early withdrawal penalties, as it gives you access to cash money at regular, predictable intervals.
For those seeking reliable growth, a platform like CD Valet can help you find higher-yield options that work for you, whether you're saving for something soon or building a cushion for the long haul.
CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.
What's more, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.
When making financial plans, it's always a good idea to think about when you'll need the money before deciding where to keep it. Emergency savings are easy to get at, while CDs are better suited to money you can leave alone until they mature. Both can help cover expenses without having to sell investments at a bad time.
However, if you're worried about market volatility or inflation, you could consider diversification into precious metals like gold.
Whether bars, coins or bullion, the precious yellow metal has historically been considered one of the ultimate safe haven assets. That's because it's not tied to one country, currency or economy, meaning that investors often flock to it during times of economic and geopolitical uncertainty — driving prices higher.
Opening up a gold IRA with the help of Priority Gold can help you get exposure to this precious commodity in a tax-efficient way — no shoeboxes full of coins here.
The advantage of a gold IRA is that it allows investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold. This makes it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
Cash reserves, CDs and gold IRAs can help you manage risk, but taxes are another part of the retirement picture.
Taxes can also eat into your retirement income, so it's worth knowing which deductions you qualify for. Under the One Big Beautiful Bill Act, Americans aged 65 and older may be eligible for an extra federal deduction of up to $6,000 per person for tax years 2025 through 2028 (6). That could mean up to $12,000 for a married couple if both spouses qualify.
The deduction starts to shrink once modified adjusted gross income tops $75,000 for single filers, or $150,000 for couples filing jointly. You can claim it whether you take the standard deduction or you itemize.
The deduction is temporary under current law, and not everyone will qualify for the full amount. For this reason, you might want to check the income rules before factoring it into your retirement budget. To be extra certain, you might also want to talk to a tax professional to see how it applies to you.
Advisor.com's automated matching engine can help you find an expert near you — for free.
Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, meaning they're legally required to act in your best interests.
Just enter a few details about your finances and goals, and Advisor.com's AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences. They can also help you figure out if alternative assets like gold are right for you.
Finding the right advisor isn't always easy — there's no one-size-fits-all solution. That's why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they're the right fit for you.
Having a plan in place can make it more comfortable to ride out market swings without reacting to every gloomy headline. Whether that plan includes stowing cash away in an emergency fund, putting it into CDs or diversifying your portfolio with assets like gold depends on your unique needs and risk tolerance. A financial advisor can help you figure out how much to keep in cash, when to draw from your investments and whether your portfolio still makes sense for your goals.
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Center for Retirement Research at Boston College (1); National Bureau of Economic Research (2); Northwestern Mutual (3); MarketScreener (4); Reuters (5); IRS (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
