One Expert Warns Against Making This Costly Mistake If You're Retiring in 2026

Key Takeaways Pre-retirees heavily invested in AI stocks may be taking on more risk than intended and should consider rebalancing their portfolios to maintain diversification , according to personal finance expert Jean Chatzky. For those concerned about a recession, keeping a few years’ worth of expenses in cash or fixed income in retirement can help you avoid selling longer-term assets during market downturns. A lot has happened in the world of personal finance in 2025-from the passage of new tax legislation to the AI boom that has lifted the stock market to record highs. For individuals planning to retire in the coming year, the financial landscape can be challenging. Jean Chatzky has some recommendations for those looking to retire next year and who may hold a lot of stocks in AI.Michael Nagle / Bloomberg via Getty Images To help pre-retirees decipher what's happening, Investopedia connected with retirement expert Jean Chatzky. She has been in the personal finance space for decades, writing as a columnist for AARP and spending nearly 25 years as a financial editor at NBC. This is an excerpt of the conversation, edited for brevity and clarity. INVESTOPEDIA: Should people close to retirement worry about the concentration of the stock market in AI stocks like Nvidia ( NVDA ) and Google ( GOOGL )? What can people do about it? JEAN CHATZKY: People should be worried unless they have been engaged in active rebalancing. When the stock market runs hot, our [target] asset allocations tend to get out of whack. There's a lot of research on rebalancing intentions versus rebalancing in actuality. Essentially, what it shows is that a lot of people say that they rebalance [but] . . . just don't do it. In a bull market, you end up overweighted in certain categories of stocks, like AI. Therefore, [you] are taking more risk than you intended to take. INVESTOPEDIA: For pre-retirees who are concerned about the state of the economy due to tariffs and signs of softening consumer demand-especially among those who are low or middle income-is there anything they should do? CHATZKY: Besides rebalancing, I think the number one thing that people should be looking at is delaying Social Security . The lever that is actually going to make a big difference in retirement is Social Security. Delaying Social Security until you get as close to 70 as possible is a really smart move for the majority of people who can afford to do it [because it increases the size of your monthly benefit]. The second thing that I would say to look at, if you are feeling unconfident, is your ability to keep earning. Staying in the workforce a little bit longer is incredibly powerful. When you stay in, you give your retirement assets time to grow and [you] may still be able to contribute [to retirement savings accounts]. INVESTOPEDIA: If someone encounters a downturn at the beginning of retirement, should they consider changing their withdrawal strategy? CHATZKY: The 4% rule becomes really problematic...

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