Market Volatility Is Not the Enemy — Poor Planning Is
April 22, 2025The stock market takes a dip and suddenly every headline screams “Retirees in Danger!” But let’s get something straight: market volatility isn’t your biggest risk in retirement — emotional investing and poor withdrawal strategies are.
Markets move. That’s not news. What matters is how you react.
Take 2020. The S&P 500 fell more than 30% in a matter of weeks. Many retirees panicked and sold. Those who stayed the course? Many saw full recoveries and gains by year’s end. If your retirement plan can’t weather a correction, it’s not the market that failed — it’s the strategy.
Let’s look at two investors:
Investor A, 65, retires and immediately begins pulling 6% annually from a volatile stock-heavy portfolio. Within the first year, the market drops 20%. Their portfolio shrinks by 26% between withdrawals and losses.
Investor B, same age, same portfolio, but uses a strategy involving a cash reserve and dividend-based income. During the downturn, they use the reserve instead of selling. Their account recovers fully before the reserve is depleted.
Same market. Different outcome. Planning makes the difference.
According to Vanguard, sequence of returns risk — the order in which market gains and losses occur — can have a dramatic effect on how long your money lasts. But strategies like bucket planning, income flooring, and annuity hybrids can guard against that.
“Volatility doesn’t destroy wealth. Bad timing and fear do.”
— Drew Stevens, The Retirement Professor
Your retirement portfolio should be built like a fortress, not a house of cards. It needs walls against taxes, inflation, and downturns — and a moat of cash flow strategies.
Reflection Question:
If the market drops 20% tomorrow, will your retirement plan let you sleep at night?
#MarketVolatility #RetirementIncome #WisdomToWealth #TheRetirementProfessor #FinancialPlanning #StockMarket #SmartInvesting #RetireWithConfidence
