Crafting a Comfortable Portfolio for Retirement

Note: This video is part of Morningstar's 7 Days to Retirement Readiness week special report.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. As retirement draws close, it's a great time to take a fresh look at your investments. You may be rolling over money from your workplace retirement plan to an IRA, for example, or consolidating multiple accounts together.

From that standpoint, it's an ideal time to cut out any extraneous investments from your portfolio. You might have multiple investments from the same category in the same account or narrowly focused investments that duplicate exposure in your more diversified holdings. Cut the clutter in your portfolio by eliminating narrowly focused investments in favor of well-diversified core stock and bond funds.

A successful retirement portfolio is one you can sit tight with through varying market conditions. To help ensure that you don't sell at the bottom, you might consider investments that lean toward the conservative side of their categories. On the equity side, for example, you might put a greater emphasis on wide-moat dividend-paying stocks. On the bond side, prioritize high credit quality.

Keeping your portfolio's costs down is important at every life stage, but especially in retirement, when your portfolio becomes more conservative and its expected rate of return also declines. If you hold mutual funds or ETFs in your portfolio, focus on those with low expenses relative to their peers. Manage your portfolio with an eye toward reducing tax costs, too. Hold on to your tax-sheltered accounts for as long as you can, and use tax-efficient investments in your taxable accounts.

Thanks for watching. I'm Christine Benz for Morningstar.com.