Along with all the decision-making about how to change to retirement status, it’s very important to think about how you should invest in retirement. So as you look ahead to retirement and create an income plan, you should also consider factoring in the following investment strategies.

Strategy number 1: Beware of inflation

With retirement lasting for 20, 30 or more years, inflation can be a threat to your retirement income and its purchasing power over time. Even at an inflation rate of only 3%, your purchasing power can be cut in half after 24 years. At 5%, the time frame drops to about 14 years.

And you shouldn’t necessarily assume that you’re protecting your longer-term retirement income by staying in “safe” low-yielding investments. Often, exposing funds to some investment risk through growth assets (equities) and fixed income (bonds and credit instruments) as well as property can be effective at maintaining your retirement capital and creating an income stream large enough to live on.

Strategy number 2:  Continue to diversify

Staying diversified while you’re receiving retirement income is just as important as it is while you’re accumulating assets for retirement. This is especially true if some or most of your income is tied to investment performance.

Since different types of investments, or asset classes, will perform differently over time, diversification may help offset the volatility of a single investment. The upward movement of one asset class may help reduce losses from the downward movement of another. And as mentioned above, diversifying your investments may be a way to help protect your longer-term retirement income from the effects of inflation.

As you create an investment strategy, try to find a comfortable balance between the safety of lower-yielding, fixed-income investments and the growth potential offered by investments with greater risk, like stocks and real estate. And keep in mind that diversification doesn’t guarantee that you’re safe from all losses.