“People are living longer, living costs have increased disproportionately, and they want to help their children and grandchildren earlier.

“That means the capital they have left needs to work much harder,” Williamson says.

That is the biggest shift in retirement investing. It’s no longer enough to preserve your nest egg. The investment strategy that got you to retirement is unlikely to be the one that gets you through it.

Once you have worked a little longer, downsized the family home or sold the investment property, there are only two core levers left. Spend less, or invest more deliberately, because your lifestyle depends on it.

Massey University’s Retirement Expenditure Guidelines estimate a comfortable retirement for a metropolitan couple costs $90,000 a year. NZ Super covers about half of that. The rest must come from somewhere, which is where many retirees run into trouble.

Since its launch in 2007, KiwiSaver has done much of the investment heavy lifting during New Zealanders’ working lives.

Retirement changes that. Downsizing or selling an investment property often leaves people with the largest pool of liquid capital they will ever own.

Its sole purpose is now to fund the next 20 to 30 years of life.

That requires an investment strategy you understand, believe in and can stick with when markets inevitably wobble. Surprisingly few Kiwis have one.

The other shift is psychological. Many retirees still see preserving capital as the goal. They want to live off the income and leave the nest egg untouched for the children.

For many, that simply is not realistic.

Retirement often means spending the income your investments generate, and over time, drawing on some of the capital itself.

I used to tell my clients to enjoy their capital. Not squander it, but don’t sit in a cold house, skip holidays or delay healthcare simply so your children inherit a little more.

Your lifestyle and your investment strategy should work together. If you want to spend more, your investments need to work harder.

If you want to invest more conservatively, your lifestyle may need to adjust.

Give while you can still see it land

Another noticeable shift is the rise of what Williamson calls ‘living giving’.

“People want to help their children and grandchildren while they are still here to see the difference it makes,” Williamson says.

That might mean helping with a first home, reducing a mortgage or contributing towards education or university costs.

There is something deeply satisfying about seeing your money improve the lives of the people you love, rather than waiting until you are gone.

Williamson is seeing about 10% of retirees’ wealth being passed on in early inheritances.

Set-and-forget is not a strategy

Kiwis like the idea of set-and-forget investing.

It sounds disciplined. In reality, it often means making one decision decades ago and never revisiting it.

Likewise, deciding to “wait and see what the market does” sounds sensible but is usually just another way of avoiding a decision.

Williamson recalls meeting a client in his 70s who had managed almost a million dollars himself.

“I asked what his investment strategy was. He said he just read bits and pieces and got frightened.”

Hope is not a retirement strategy.

Risk tolerance is not the same as risk capacity or your required risk

One of the most important distinctions investors miss is the difference between what feels comfortable and what is actually required.

If your retirement plan requires a 7% return to fund the life you want, calling yourself a conservative investor does not change the maths.

It simply means something else has to give.

“Sometimes I have to tell people they may need to work a little longer or spend a little less,” Williamson says.

“Nobody likes hearing that.”

The answer is not taking reckless risks. It is understanding the levers available to close the gap before retirement rather than after.

Most people become more comfortable with investing once they have lived through a few market ups and downs and seen that good strategies are designed to weather both.

The basics worth understanding

Retirement portfolios are typically built around two types of investments: income assets and growth assets.

Income assets, such as term deposits, bonds and cash, provide stability and regular income but often struggle to keep pace with inflation.

Growth assets, such as shares and property, are more volatile but have historically delivered stronger long-term returns.

The balance between the two changes as you age. During your working years, property can be an excellent wealth-building tool. Leverage amplifies long-term growth and time is on your side.

Retirement changes the equation.

When your salary stops, liquidity becomes just as important as growth. You need investments that generate income and can be accessed when you need them.

That is why many retirees eventually swap bricks for liquidity.

Selling an investment property can unlock capital, improve income, provide greater flexibility and reduce the risk of having too much wealth tied up in a single asset.

Another concept worth understanding is sequencing risk. It is not just the return you earn that matters, but when you earn it.

A major market downturn early in retirement does more damage because you are withdrawing money while your portfolio is falling.

Volatility also gets a bad reputation. It’s normal for markets to move. Permanent loss usually comes from abandoning a good strategy at the worst possible time.

“It comes back to what you can tolerate,” Williamson says.

“The biggest mistake is abandoning your strategy after markets fall, or having no strategy at all.”

Retirement is not the finish line for investing. It is the start of a different phase. The rules change, your priorities change, and your investment strategy needs to change with them.

The instinct is to protect your capital.

The challenge is making sure you don’t protect it so much that it stops protecting you.

Three tips for investing in retirement

The biggest risk in retirement isn’t always market volatility. It is being so conservative that your money no longer keeps up with the life you want to live.

Property may make you look wealthy, but you can’t spend paper wealth. Make sure your investments can generate income and be accessed when you need them.

The strategy that built your wealth is unlikely to be the one that funds your retirement. As your priorities change, your investment strategy needs to change with them.

Hannah McQueen is the founder and director of Age Brightly. She is also the host of The Next Bit podcast on iHeart Radio.

This article is general in nature and is not financial advice. It does not consider your financial situation, objectives, goals, or risk tolerance. All investments involve risk and can go down as well as up. Before making any investment decisions you should contact an investment adviser.