It’s a Time of Rapid Change. How to Protect Your Retirement Portfolio.

A sweeping selloff in software and services stocks should be a wake-up call for retirees. Your portfolio needs to be well diversified, and things that might seem safe—notably gold—may not fit the bill anymore.

“When we’re in a period of rapid change, diversification is the best tool at your disposal to manage risk,” says Thierry Wizman, global FX and rates strategist at Macquarie Group.

International markets look attractive. Non-U.S. markets aren’t nearly as tech heavy as the S&P 500 index, and they’re getting a lift from a weakening dollar, which is down about 7% against a basket of major currencies since the start of 2025.

Geopolitics tend to drive the dollar, which often moves in long cycles, Wizman says. America’s trade and economic policies under President Donald Trump have spurred flows out of U.S. dollar assets as global investors seek to hedge their exposure to America. The depreciation that began in 2025 could last for a decade, he notes.

That doesn’t mean you should “sell America,” as one popular trade is known. There’s still a strong case for investing in U.S. assets, including tech innovation like artificial intelligence. While AI may be hurting some software and services industries, it’s also expected to boost U.S. productivity, which is positive for economic growth.

Still, diversifying out of the dollar makes sense, and it doesn’t to have be as complicated as trading currencies. It’s enough to hold stocks in non-U.S. companies, which you can access through exchange-traded funds. A general rule is to hold international stocks in proportion to their world market cap, which would mean about 35% of your equity portfolio.

Multinational U.S. companies also offer diversification away from the dollar. About 40% of revenue in the S&P 500 comes from abroad. But you still want to diversify some of your equity portfolio away from the tech-heavy index.

Many “global” funds hold more than 50% in U.S. stocks, making them highly exposed to U.S. tech giants.

Another move to consider: Lock in some gains, especially if you’re on the cusp of retirement or a few years in. The five years before and after retirement are the “red zone” when investors are more susceptible to sequence-of-return risk, says Steve Parrish, professor of practice at The American College of Financial Services. That’s the concept that the order in which market returns happen are just as important as the returns themselves.

A downturn early in retirement can be disastrous for portfolio longevity if it forces a retiree to dip into a declining balance.

Capturing gains now—selling some long-term winners, for instance—may also be a good way to fund a cash bucket. A general rule is to have at least one year’s worth of cash for housing, food, and other core expenses. Bear in mind the tax consequences, however, if you’re selling stocks or funds from a taxable account.

There’s also another way to preserve your portfolio: Work longer. Postponing retirement isn’t an option for everyone, but for those who can, it’s a great way to pad your nest egg.

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com