Navigating Retirement Pressures: How to Defend Against Market Downturns Retirement isn’t just about saving — it’s about protecting what you’ve built.

Most people spend decades diligently saving for retirement with the goal of maintaining their lifestyle when work becomes optional. But what happens when the market doesn’t cooperate? What if the timing of retirement collides with a bear market? That’s when retirement pressures can derail even the best-laid plans.

The Danger of Market Timing

Let’s look at a common scenario.

Imagine John, a 67-year-old retiree who entered retirement with $1,000,000 invested in the S&P 500. His plan was to withdraw $80,000 per year to fund his lifestyle. Unfortunately, he retired in 1973 — just before a major market downturn.

In his first year, the market dropped by 14.67%, and his portfolio lost an additional $135,000 after accounting for income withdrawals. The following year was even worse, with a market decline of 26.31%. By the end of year two, John's balance had fallen to just over $519,000 — despite only withdrawing $160,000 of income. That’s a loss of nearly half his portfolio in just two years.

Even though the market rebounded in year three with a gain of 37.14%, his account never fully recovered. This is the devastating impact of what’s known as sequence of returns risk — withdrawing from your investments during a downturn can permanently impair your retirement income strategy.

The Sequence Defense Strategy

What if John had access to a separate, non-market source of income — a Sequence Defense Buffer?

By avoiding withdrawals during the down years and using an alternative source of cash, John could have given his investment portfolio the breathing room it needed to rebound. Here's how that scenario plays out:

• In year one, John still draws $80,000 from his investment account and ends with $785,036.
  
• In year two, instead of drawing income, John taps into a separate buffer account. His investment portfolio avoids a withdrawal, cushioning the impact of the market's -26.31% loss. His account ends the year at $578,493 — significantly higher than the original scenario.
  
• In year three, the market recovers, and his portfolio rebounds to $793,345 — almost fully recovering.
  

  The Takeaway

  You don’t need to predict the market. You need to prepare for it.

A Sequence Defense Buffer — whether it’s a properly structured whole life insurance policy, annuity, or other non-correlated asset — acts like a financial pressure valve. It allows retirees to pause market withdrawals during turbulent times and protect the long-term sustainability of their income.

If your retirement strategy doesn’t include a backup plan for market volatility, it’s time to rethink the approach. The goal isn’t just growth — it’s resilience.

Schedule your complimentart discovery call today with Brandi Jo.