First growth, then income. If you're like most investors, you want to achieve growth while you're working and income after you retire. But that doesn't necessarily make it smart to change your investment strategy when you retire by shifting your portfolio completely out of stocks into less volatile, "income investments like bonds and cash equivalents.


The Tax Bite
As a rule, stocks are more risky and volatile than other types of investments. Therefore, you might decide, as some retirees do, to sell your stocks and reinvest in less risky securities in order to protect the gains you've achieved. But, unless the stocks you sell are in an individual retirement account or other tax-deferred retirement account, that move won't preserve all of your accumulated gains. When you sell your stock, you'll lose part of those gains to capital gains tax.


The Inflation Bug
You may also create another, potentially more serious, risk. Without stocks in your portfolio, you increase the risk that future inflation will seriously erode the real value of your investments and reduce your spending power.


to read the entire article.