Investing Rules Fail in Retirement!
- Will Riggs
- Jun 29
- 4 min read
Updated: Jul 7
For decades, investors have followed familiar rules of thumb when planning for retirement. Strategies such as the “4% rule” and the classic “60/40 portfolio” have long been considered reliable guidelines for building and preserving wealth. But retirement today looks very different than it did for previous generations.
Higher inflation, market volatility, rising interest rates and longer life expectancies are causing many retirees to rethink whether the same strategies that helped them accumulate wealth are still appropriate once they begin living off that accumulated wealth. The truth is simple, the strategies that get you to retirement are not always the same strategies that help you successfully live through retirement.
During your working years, your primary goal is accumulation. You’re consistently contributing to retirement accounts, investing regularly and allowing time and compound growth to work in your favor. Market downturns during these years can even create opportunity. Investors are often encouraged to “buy the dip” because they still have years, maybe even decades before retirement. But retirement changes the equation.
Once you retire, you enter what’s known as the distribution phase. Instead of contributing to your portfolio, you begin taking income from it to cover living expenses. At this stage, market declines can become significantly more damaging because you may be withdrawing money while your investments are simultaneously losing value. That combination creates what many advisors refer to as sequence of returns risk, the danger that poor market performance early in retirement can permanently impact the longevity of your portfolio.
One of the most widely discussed retirement concepts is the 4% rule mentioned earlier. The idea is straightforward, if you withdraw roughly 4% of your retirement savings annually, your assets should theoretically last throughout retirement under average market conditions. The key phrase there is “average market conditions.” Real-world markets are rarely average.
Many Americans experienced this firsthand during what is often called the “lost decade.” Following the dot-com crash in 2000 and the housing market collapse in 2008, some retirees found that withdrawing 4% annually became unsustainable because portfolios simply didn’t recover quickly enough. For retirees who are heavily invested in market-based assets, those years highlighted an important lesson, retirement income strategies cannot rely solely on historical averages.
For years, the traditional 60/40 portfolio (60% in stocks and 40% in bonds) was viewed as a balanced approach for retirees. Stocks offered growth potential while bonds served as a stabilizing force during market volatility. However, recent market conditions challenged that assumption.
In periods such as 2022 and 2023, both stocks and bonds declined simultaneously. Rising interest rates negatively impacted bond funds at the same time equities struggled, reducing the diversification benefits that many investors expected. For retirees depending on bond-heavy portfolios for protection, this served as a wake-up call that diversification today may require looking beyond traditional asset allocations.
One of the most effective ways to reduce retirement stress is creating a reliable income floor to cover fixed monthly expenses. When retirees know their core needs, i.e., housing, groceries, utilities, healthcare and transportation are covered market fluctuations often feel far less overwhelming. The goal is peace of mind that comes from knowing that regardless of what happens in the market, your basic lifestyle remains secure.
Many advisors recommend maintaining two to three years of planned spending in short-term conservative investments or cash reserves. This approach is often referred to as part of a “bucket strategy.”
The idea is simple:
Short-term funds provide stability and liquidity.
Mid-term assets focus on moderate growth.
Long-term investments remain growth oriented.
Having easily accessible funds available during volatile market periods can help retirees avoid selling long-term investments at unfavorable times.
A common mistake many retirees make is underestimating what retirement actually costs.
When building a retirement budget, it’s important to account for more than just routine monthly expenses.
Unexpected costs happen:
Home repairs
Vehicle replacements
Veterinary bills
Medical expenses
Family emergencies
Failing to account for these “what if” scenarios can create withdrawal rates that become unsustainable over time.
Perhaps the most important thing is understanding that retirement requires more than just a portfolio, it requires a plan.
During your working years, you receive a paycheck every two weeks. In retirement, your investments and income strategy effectively become your paycheck.
That’s why retirees should regularly review and stress test their income plans against:
Market downturns
Inflation
Longevity risk
Healthcare expenses
Tax changes
A well-structured retirement strategy should be designed to adapt, not simply hope that the markets cooperate.
If you would like to explore how to mitigate or eliminate sequence of returns risk, create a reliable income floor and reduce retirement stress, we are here to help. Our comprehensive retirement planning webinar can provide deeper insight into these strategies. Please click the link below to register for this on-demand, no-cost, no-obligation financial educational event.
This webinar explores:
Protecting your retirement income from sequence of returns risk.
Strategies for building a reliable income floor.
Modern approaches to diversification
Retirement is not something you should leave to chance, it is something you should design with intention. The decisions you make today can determine whether your future feels uncertain or if it feels secure. If you are ready to turn your savings into a sustainable income strategy and gain greater confidence about what lies ahead, now is the time to take the next step. When it comes to your retirement, hope is not a strategy but having a plan is.
Will Riggs, NSSA
Financial Advisor
For informational and educational purposes only. This material should not be construed as individualized investment, legal, tax, or insurance advice or as a recommendation to buy or sell any security or insurance product. Investing involves risk, including possible loss of principal. Past performance is not indicative of future results. Consult your financial, tax, and legal professionals before making financial decisions. Strategic Wealth Partners is an SEC-registered investment adviser; registration does not imply a certain level of skill or training. Any guarantees discussed are backed solely by the issuing insurance company. For more information, including our Form ADV, please visit adviserinfo.sec.gov.
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