When — and How — to Rebalance Your Retirement Portfolio

Your portfolio doesn’t stay where you put it. Over time, markets move, some investments outperform, others lag, and the allocation you carefully built quietly drifts into something different. That drift is normal. Leaving it unaddressed is where problems start.

Rebalancing is the process of realigning your portfolio back to its intended mix — and for people approaching or already in retirement, it’s one of the most important things you can do to stay on track.

What Rebalancing Actually Means

If your target allocation is 70% stocks and 30% bonds, and a strong market run pushes stocks to 80%, your portfolio is now carrying more risk than you planned for. Rebalancing corrects that: you trim positions that have grown too large and use the proceeds to add to those that have shrunk.

Here’s the part that trips people up: you’re selling what’s done well and buying more of what hasn’t. That runs counter to every instinct. But the logic holds — you’re selling high and buying low on a modest scale, and you’re keeping your risk profile where it was designed to be.

Three Steps to Rebalance

The mechanics are straightforward.

1. Record your target weights. Every asset in your portfolio has a weight — its value as a percentage of the whole. These targets should reflect your goals, timeline, and risk tolerance. Know what they are.

2. Compare current weights to your targets. Markets move and weights shift. Review where each asset class stands today against where it’s supposed to be. Significant drift in either direction is a signal to act.

3. Adjust. Trim positions that have grown too large and reinvest in those that have fallen behind. The goal isn’t to chase returns or time the market — it’s to get back to the allocation that makes sense for your situation.

When to Rebalance

There’s no single right answer, but here are the most common situations that call for a review.

On a schedule. Many people set annual or semi-annual review dates. The discipline matters — without a scheduled review, a year can easily become five, and you’ve been running a completely different portfolio than you intended.

When performance crosses a threshold. Some advisors monitor continuously and rebalance whenever any asset class drifts beyond a set percentage. This keeps the portfolio tighter, but can mean more frequent trades and associated costs.

When life changes. This is the one people overlook most. Your portfolio should reflect your life — and life doesn’t stay still. Consider a review when:

• You get married or divorced
• Your income changes significantly — up or down
• You change jobs and face a 401(k) decision
• You take on substantial new debt

• You pay off a major obligation like a mortgage or student loans
• You relocate to an area with a different cost of living
• Your current plan simply isn’t meeting expectations

When retirement gets close — or arrives. As you move within 10 years of retirement, the stakes change. You have less time to recover from a major market drop. And once you’re in retirement and drawing from accounts, rebalancing becomes part of your withdrawal strategy — which assets you sell first has real tax implications.

What Rebalancing Isn’t

It isn’t market timing, and it isn’t reacting to headlines. Done well, rebalancing is a disciplined, scheduled process — not a response to panic or excitement. Over-trading can cost more in fees and taxes than it saves.

It also isn’t something you have to manage alone. Removing the emotional element — the instinct to hold onto winners and dump losers — is one of the most practical reasons to work with a dedicated advisor.

The Bottom Line

A well-built portfolio requires maintenance. Markets shift, life changes, and the allocation that made sense at 45 may not make sense at 60. Regular rebalancing is how you stay aligned with your goals — not by reacting to every move the market makes, but by staying intentional about what your money is doing.

If you haven’t reviewed your allocation recently, that’s the right place to start.

Schedule a free, no-obligation consultation at SCMadvice.com — or call 800-200-3870. We’ll review where you stand and help you determine whether a rebalance is in order.

Securities offered through Independent Financial Group, LLC (IFG), a registered broker-dealer. Member FINRA/SIPC. Advisory services offered through Scarborough Capital Management, a federally registered investment adviser under the Investment Advisers Act of 1940. IFG and Scarborough Capital Management are unaffiliated entities. Registration as an investment adviser does not imply a certain level of skill or training. The information provided is general in nature and should not be considered investment, tax, or financial advice. Investing involves risk, including the potential loss of principal. CDs offer FDIC insurance and a fixed rate of return; investment securities will fluctuate in value. Consult a tax advisor regarding 529 plan and student loan deduction eligibility.