Market Volatility: Creating an Adaptable Retirement Plan

An older man on a roller coaster with a young boy covers his eyes as if he's scared.

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published 25 January 2025

The transition to retirement comes with unique financial challenges. Managing withdrawals, mitigating risks and finding the right strategies for sustainable income can make or break your retirement plan. With thoughtful preparation and expert guidance, you can create a stable and fulfilling financial future.

A key to successful retirement planning is understanding your options. Financial planning isn’t a one-size-fits-all process; it should be tailored to your needs and goals. Working with an adviser who serves as a coach and educator — rather than simply dictating a plan — can make a world of difference.

For example, we helped a client, Travis, transition from a volatile, cookie-cutter portfolio into one that incorporated safe assets and personalized strategies. Through education and collaborative planning, Travis understood the reasoning behind his allocation choices, boosting his confidence in the plan. This tailored approach has supported him for over two years and continues to provide stability.

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Single vs married: Tailoring to individual goals

The structure of your retirement plan should reflect your personal objectives, regardless of your marital status. While single and married individuals may have different dynamics, the key is to address specific goals:

Legacy planning. For individuals who wish to leave assets to heirs, structuring a plan to meet those wishes is essential. Trusts, life insurance and tax-efficient strategies can help protect and pass on wealth.
Spending down assets. For those without a legacy plan, the focus shifts to optimizing resources for personal fulfillment during retirement. Innovative strategies can ensure you maximize your wealth while meeting your income needs.

Tailoring your plan starts with aligning it to your vision for retirement and then building a strategy that achieves those goals.

Leveraging opportunities in changing markets

Market conditions constantly evolve, offering both challenges and opportunities. A successful retirement plan should be adaptable, taking advantage of favorable conditions while safeguarding against downturns.

Capitalizing on rising interest rates. Fixed and income annuities have become more attractive in the current environment. Higher interest rates allow these products to provide reliable income streams, bridging income gaps in your retirement portfolio.
Working with a true fiduciary. Fiduciaries are required to act in your best interest, exploring all tools in the marketplace to meet your needs. Beware of rigid stances — such as advisers avoiding annuities entirely or annuity producers offering limited investment options. A well-rounded adviser ensures your plan is holistic and balanced.

Mitigating withdrawal risks during downturns

Market volatility can have a compounding effect on your retirement savings, especially if withdrawals occur during downturns. To protect your portfolio:

Fill income gaps with safe assets. Identify fixed expenses and use safe assets — such as fixed index annuities, bonds or CDs — to cover income shortfalls. For example, if a retiree needs $100,000 annually but receives $70,000 from Social Security and a pension, the remaining $30,000 can be secured through safe assets. This approach provides stability for five to 10 years during market corrections.
Establish guaranteed income streams. Products like privatized pensions, structured annuities or income riders offer predictable income regardless of market fluctuations. These tools create a financial foundation that can help weather uncertain economic conditions.
Diversify your income sources. Relying on multiple income streams, such as pensions, Social Security, and investment returns, minimizes the risk of overdependence on any single source during volatile times.

Avoiding common DIY pitfalls

While managing your portfolio independently might seem like a way to save money, it can often lead to costly mistakes. Consider this analogy: Would you renovate your house yourself, or hire a contractor who specializes in renovations?

One client, a successful attorney managing his own portfolio, was unnecessarily paying $100,000 annually in excess taxes due to inefficiencies in mutual fund investments. After working with us to reallocate his portfolio, he significantly reduced his tax burden and improved his financial outcomes. The lesson is clear — financial expertise matters, especially when it comes to complex issues like tax efficiency and portfolio structure.

Asking the right questions

To determine whether your adviser is equipped to guide you through the distribution phase, ask these critical questions:

Have they educated you about safe assets, annuities and tax-efficient strategies?
Have they created a tailored income plan that accounts for market volatility?
Are they proactive in identifying new opportunities and adapting your plan as conditions change?

If the answer to any of these questions is “no,” it might be time to find a financial professional with the expertise to navigate the complexities of retirement distribution.

The bottom line

Navigating market volatility and ensuring sustainable income during retirement requires more than a cookie-cutter approach. By understanding your options, leveraging safe assets and working with a knowledgeable adviser, you can mitigate risks and achieve your retirement goals. The journey doesn’t end at retirement — it’s just the beginning of a new phase where proactive planning and expert guidance ensure long-term success.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Cliff Ambrose, the visionary behind Apex Wealth, serves as a wealth manager with an innate passion for steering individuals toward enriched financial independence. His journey began with a robust educational foundation in finance and economics, culminating in a degree that set the stage for his financial guidance career. With his start at Metlife, Cliff acquired valuable hands-on experience in the industry, complemented by securing his Series 6 and Series 63 licenses and, later, his Series 65 qualification.