Portfolio Rebalancing Is a Good Retirement Habit – The Wall Street Journal

Here is something retirees ignore at their peril: Portfolio rebalancing, a simple technique that calls for periodically skimming profits from winners and plowing the proceeds into losers.

Rebalancing is a good idea at any age. It reduces risk by preventing overexposure to stocks and instills good habits by building the discipline to stick to a long-term financial plan.

However, “the utility of rebalancing shoots up in retirement,” said Christine Benz, director of personal finance at Morningstar Inc.

After all, that is when risk management becomes especially important. Rebalancing can also help retirees produce a stream of income from a diversified portfolio of stocks and bonds, Ms. Benz said.

With stocks near all-time highs, now is a good time to get in the habit. Here are ways to use rebalancing to your advantage in retirement.