Interest Rate Trends & the Impact on Real Estate
May 22, 2025
Don’t Let Market Volatility Wreck Your Retirement Portfolio
I’m always surprised by how many new clients don’t know how much of their portfolio is actually at risk.
Time and again, we find that investors haven’t made the crucial transition from the accumulation phase of their investment cycle to the preservation phase essential for retirement. They’re often exposed to far more risk than they realize—often far more than they’re comfortable with.
That’s why one of the first things we do is conduct a thorough risk assessment of their current holdings. Clients will tell us, “I don’t want to lose more than 5% to 10%,” but when the analysis comes back, we sometimes discover they’re exposed to potential losses of 20%, 30%, or even 40%.
Once they get past the initial shock, they’re ready to learn more about volatility—specifically, how it can affect their portfolios during retirement, when they’re depending on those investments for income. At that stage, market risks don’t just mean abstract percentage losses; they represent real reductions in the funds that support the lifestyle they’ve envisioned for years.
Volatility isn’t as concerning during the accumulation years. If you’re 35 and the market dips, you have decades to recover before retirement. But once you’re retired, volatility becomes a much more pressing issue.
The primary reason? You no longer have the luxury of time to recoup those losses. A significant market drop during retirement could force you to reduce spending or adjust your withdrawal strategy—possibly jeopardizing the financial stability you’ve worked so hard to build.
Some people believe that volatility balances out over time, arguing that big losses are offset by big gains. But the math doesn’t always work that way.
For instance, if you have $100,000 and lose 30% in one year, you’re left with $70,000. A 30% gain the following year only brings you to $91,000—not back to $100,000. That’s a $9,000 shortfall.
And if you’re retired and withdrawing funds to cover daily expenses, that loss becomes even more damaging. The combination of market volatility and consistent withdrawals can make it especially difficult to maintain your financial footing.
It might be time to take a serious look at the risk in your portfolio. A professional risk analysis can help you determine whether you’re taking on too much risk, being too conservative, or are positioned just right.
The results may be eye-opening—and could provide the clarity you need to make better investment decisions moving forward.
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