You've long been told to save for retirement. Now that you're finally enjoying retirement, you may need to change your investment strategy. After all, most of your money will go towards living expenses like a house payment or expensive medical bills. But that doesn't mean you have to stop investing when your main source of income is gone. Expenses are a big part of your finances in retirement, but they're not the only part. Here's how to invest your money in retirement to set you up for your golden years. 1. Calculate your retirement costs When you saved for retirement, you estimated how much you needed to save based on your anticipated needs. Now that you're retired, those needs may have changed. Use the following factors to calculate your monthly expenses in retirement: Housing payments – rent or mortgage Property taxes and homeowners insurance Utilities and maintenance Groceries and eating out Auto loan and vehicle insurance Gas and regular vehicle maintenance – or public transportation, if applicable Health insurance and ongoing medical expenses (including medicines and necessities) Life, long-term, disability, and other insurance While most people need these things, your expenses may include other things as well. For example, if you are paying for your children’s or grandchildren’s education, that could be on your list too. Or, if you have more time and would like to travel more, you could also factor in vacation costs. You could also donate to charities, enjoy ongoing gifts, entertainment, or hobbies. Once you've calculated your expenses and retirement income, you'll know how much balance you have left to invest in your retirement. 2. Withdraw Retirement Money Wisely If you have several different retirement accounts, you'll need to look at them all to see how much you can withdraw from each account and when. For example, some accounts have required minimum distributions (RMDs) that require you to withdraw a minimum amount from the account each year starting at age 72 or 73. Although these distributions are required, not making them can sometimes result in fees. Typically, you'll go to taxable accounts first, then tax-deferred accounts, and finally tax-free accounts. Withdrawals from accounts like Roth accounts aren't taxed, so your money grows tax-free and can be spent later. 3. Open a High Interest Savings Account or Money Market Account If you don't already have a high interest savings account, it may be time to open a HYSA. These accounts currently earn around 5% APY, and unlike the stock market, you can't lose money with this type of account. It's a safe place to keep your money, especially if you need to take out your RMDs and need a place to park that money. You could also use a money market account that comes with check writing capabilities and a debit card and earns a high interest rate. Even if you withdraw money from this account periodically, anything left in it may continue to accrue interest. You could also try a negotiable certificate of deposit (CD), which allows you to earn interest on a lump sum deposit for a set period of time between six months and five years. Keep in mind, however, that you can't touch the money during this period or you'll have to pay a fee. Only choose this route if you have funds to transfer into the account, are willing to maximize your APR, and don't mind letting it alone for a while. 4. Change your investment strategy Yes, you can still invest after retirement. But the way you invest your money will be different than when you were working. The younger you are, the higher the risk you can take on investments. That's because you can afford to take investment risks earlier in life and the longer you hold on to your investments, the higher your chances of reaping their rewards. As you get older, your investments become more conservative. This means moving away from individual stocks and towards bonds and cash investments. You may be able to make more profit with stocks, but the market may go into a crisis when you need to withdraw your money. This means that you may earn less and your money may not earn as much compared to other types of investments in your portfolio. You can also diversify your portfolio by including different types of investments that are less risky. For example, dividend stocks that pay out regularly tend to be much more stable than other types of stocks. 5. Try income annuities With an annuity, you pay an insurance company in exchange for regular income payments. It's not life insurance, so your family doesn't get a payout when you die. An annuity, however, guarantees lifetime payments. When you complete an annuity application, you can choose between immediate or deferred payments. This means you can take your payments immediately or defer them to a later date. You can also choose between a fixed or variable annuity. Fixed index annuities pay out your funds based on the performance of the stock market. They don't affect your investments, but they can give you additional benefits. They are one of the safest annuities available. Variable annuities offer more investment options, but there's no guarantee of a fixed amount. That means your payments can fluctuate depending on market movements. That also means you could lose money. Things to consider for investing in retirement Retirement doesn't mean you stop investing. Instead, you should modify your investment strategy, keeping in mind a few important rules of thumb: Hold more cash in reserves than in illiquid investments. Make sure your portfolio is diversified. Take appropriate steps to reduce your tax risk. Create or update your estate plan with a probate attorney or other financial professional. If you are planning for retirement or have a fixed budget, talk to a financial planner who can help you tailor a plan to your specific retirement needs.