Navigating Retirement Decisions in a Volatile Market
At LifeBranch Wealth Partners, we’ve spent years, often decades, helping clients prepare for retirement through comprehensive financial planning, wealth accumulation strategies, and disciplined investment management. But even the most well-prepared individuals face challenges when markets decline, especially during the critical transition from saving to spending.
The Emotional Shift
Moving from decades of earning and saving to relying on your own assets in retirement is a major life adjustment. When market volatility enters the picture, that adjustment becomes even more emotional.
Consider a couple we’ve worked with for many years. Their retirement income projections had grown steadily, giving them confidence to retire later this year. Then, market declines caused their projections to dip, not dramatically, but enough to make them pause and reconsider. Instead of retiring now, they’re weighing whether to work a little longer until conditions stabilize. This scenario is common: retiring during economic uncertainty amplifies stress and second-guessing.
Why Market Declines Matter
Periods of volatility can temporarily reduce portfolio values, which impacts withdrawal strategies and long-term sustainability. Retiring at the wrong time can expose individuals to sequence-of-returns risk which results from drawing down assets when markets are low. This can shorten portfolio longevity.
Strategies for Pre-Retirees
If you’re approaching retirement during a downturn, consider these steps:
- Delay Retirement by 6–18 Months
Continuing to earn income and contribute to retirement accounts while markets recover can ease emotional stress and strengthen financial security. Even a short delay can allow assets to rebound, creating a larger buffer for future volatility. - Revisit Your Retirement Timeline
Adjusting expectations now can prevent regret later. A flexible plan helps you stay confident in your decisions.
Strategies for Retirees
Already retired? Focus on preserving assets during market lows:
- Reduce Non-Essential Spending
Delay large home projects, car replacements, and discretionary travel until markets stabilize. - Avoid Selling Investments at a Loss
Cutting back temporarily can prevent liquidating assets when values are depressed.
What to Do When Markets Are High Before Retirement
Periods of strong market performance can create an opportunity to strengthen your retirement plan and build peace of mind for the future:
- Lock in Gains Strategically
Consider reallocating a portion of your portfolio from equities to more conservative investments to protect recent growth. - Build a Cash Reserve
Setting aside 12–24 months of living expenses in cash or short-term instruments can reduce the need to sell investments during early-retirement volatility. - Stress-Test Your Plan
Work with your advisor to model scenarios that include market downturns early in retirement. Knowing your plan can withstand turbulence provides confidence and clarity. - Review Withdrawal Strategy
Establish a flexible withdrawal approach, such as a guardrail system, that adjusts spending based on market conditions.
Taking these steps during strong markets can help ensure that early-retirement volatility doesn’t derail your long-term goals.
The Role of Your Advisor
Working with a financial advisor during both high and low market periods provides clarity and peace of mind. Advisors can model spending scenarios, assess probability of success, and help you make informed decisions without overreacting to short-term market swings.
One thing is certain: volatility will happen. Having a gameplan and communicating with your advisor makes all the difference in navigating retirement confidently.
Ready to create a retirement strategy that withstands market uncertainty?
Reach out and let's keep you on track for your goals.Together, we can work to keep you on-track toward your financial goals.
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Read more articles by Morgan Nichols