If you’ve been watching the markets lately and wondering whether your retirement income will hold up, you’re not alone. Bull and bear market predictions, steep market swings, stubborn inflation, and global uncertainty have many of our clients asking the same question: “Is my money still going to last?” The short answer is: with the right plan in place, yes.
Sequence of Returns Risk
During your working years, a market downturn was a setback — but you had time to recover. In retirement, the dynamic changes. You’re drawing down your portfolio rather than adding to it, which means a prolonged downturn early in retirement can have an outsized effect on how long your money lasts. This is known as sequence of returns risk — the danger of withdrawing too much from a portfolio during an extended downturn early in retirement. This type of risk is one of the most important concepts in retirement planning and the real risk for retirees.
Structure
That is precisely why retirement income planning is not simply about “taking 4%” or living off dividends. It is about structure:
- A thoughtful strategy typically includes cash reserves for near-term spending, high-quality bonds for stability, equities to preserve purchasing power
- A flexible withdrawal framework that allows adjustments when markets are unusually strong or weak.
When these pieces are in place, built in your financial plan, volatility becomes something we prepare for — not something that forces reactive decisions.
Diversified Income Streams
It is also worth remembering that income in retirement does not come solely from portfolio withdrawals. Social Security, pensions (where applicable), dividends, and bond interest all contribute to a diversified income stream. Even in difficult market years, many of these sources continue uninterrupted.
Periods of volatility often feel more threatening than they truly are because retirement changes our psychology. Also remember that it is human to feel a market down turn translated as a ‘loss’) much more than an upward market. During accumulation years, market dips can feel like opportunities. During retirement, they can feel like personal threats. But the underlying investment principles do not change simply because the paycheck has stopped.
Financial Plan
The purpose of planning is to build resilience before uncertainty arrives. In a good plan the structure of your investments strengthens the stability of your portfolio and will make your money last. We also ‘test’ your financial plan for many different sequences of returns, and when the majority of the results are positive, we declare your financial plan solid.
If you find yourself feeling uneasy during market swings, that is entirely normal. This is a good moment to revisit your plan — not to overhaul it, but to confirm that your income strategy still aligns with your spending needs, risk tolerance, and long-term goals.
Markets will continue to fluctuate. They always have. The more important question is whether your retirement plan was designed with that reality in mind.
