Stock market losses are causing pain for retirees and late-career workers who haven’t implemented an income protection strategy, either through bucketing techniques or the purchase of guaranteed income. The good news? It's never too late to apply a plan.
It’s also important to keep a longer lens as economic headlines turn sour, experts agree, and to remember that 2025’s losses are coming after an extended period of notable gains. Over the past five years, for example, the S&P is still up about 120%. Since the lows of 2009, it’s up over 600%.
“We’re still on the heels of the biggest bull market in modern American history,” Joseph Patrick Roop, CEO of Belmont Advisors, told ThinkAdvisor in an interview Thursday, shortly after the S&P 500 plunged 4% in early trading. “From that long-term perspective, it still can be a good time to transition towards safer assets, even during the current market dip.”
Retirement investors can take advantage of interest rates that are higher than they have been in a generation, Roop noted, and redeploying some of the portfolio toward less risky assets could allow clients to lock in substantial returns for longer.
Likewise, Roop said, it’s a good time for people in their 30s and 40s to seize investment opportunities for future retirement income needs. The same is true for Belmont clients who have additional assets that could be allocated to “buy the dip.”
“No one has stepped up quite yet and said, ‘OK, I’m ready to buy this dip,’” Roop noted. “But I do expect that time will come. We’ll certainly be looking to strategically redeploy slices of the safe portfolio in the weeks and months ahead.”
Bucket Strategy
While tactical opportunities abound, it’s also clear that the best wealth protection strategies are put in place well ahead of any big market drops. That’s why Roop’s North Carolina-based RIA bakes defense against unpredictable market events into each financial plan for clients — about 90% of whom are older than 60.
“We utilize a bucket-style protection strategy, and on average we are looking to insulate five or more years worth of income needs for our clients in 100% principal protection assets, whether that’s CDs, annuities or government bonds,” Roop said. “That’s bigger than the one to three years of protection you might read about, but we’re sure it’s the right amount.”
A History Lesson
The global financial crisis of 2008 is a recent example of just how long it can take for markets to fully recover from big losses — it took the S&P 500 more than four years to return from its 2009 low point to its previous high. The current market correction could quickly snap back to positive territory, Roop said, but it’s also possible that the Trump administration digs in its heels on tariffs and sparks a recession.
“What we are constantly telling our clients is that we can’t know when market events like this will happen, but we can be sure that they will happen at some time or another,” Roop said. “For advisors, it’s not hard for us to build these protection strategies. What’s hard is getting people to really buy into this perspective during the boom times, and again, we’ve just come out of the biggest bull market run in modern American history.”
Showing clients history is one way to convince them that they need to carry significant income protection as they head into retirement, Root noted. The most effective approach, he added, is to explain how a high degree of portfolio protection fits neatly into their overall aspirations for retirement.
“For some people, the goal might be $100,000 a year in income to live on without needing to worry,” Roop observed. “For others, it might be ensuring they leave $1 million to their kids. Whatever the goal, we build the plan around that and show them how protection fits into the overall strategy. We strive to do so in a way that isn’t overly complex, either, by building a one-page financial plan.”
Other Recommendations for Retirees
Responding via email to a similar set of questions, J.P. Morgan Asset Management’s Sharon Carson told ThinkAdvisor on Thursday that late-career workers should rerun their long-term retirement plans or ask their financial professional to do so.
“It is important to stress to beware of trying to time the market,” Carson wrote. “If people don’t have a real plan, using a financial calculator taking their own situation into account is a highly recommended step, especially if they are considering retiring soon.”
Citing data from the recently released J.P. Morgan Guide to Retirement, Carson observed that working “just a little longer” than planned or working part time in retirement may have a surprisingly positive effect on a retirement plan’s success.
“This is because an individual may have fewer years to fund before they take their Social Security — or they may be able to put off taking their benefit, which would increase their benefit amount,” Carson said. “They won’t be spending down their portfolio as soon, and they may be able to save more for their retirement. The combined impact of this can be significant.”
Even part-time work in retirement can allow clients to draw less from their portfolio until they stop working completely. But, Carson concluded, sequence of return risk is the highest when wealth tends to be greatest — and that is generally just before and early in retirement.
“Ideally, individuals and financial professionals would balance this sequence of return risk with the need for growth in the portfolio over a long time frame to keep up with inflation over a long retirement,” Carson said. “One way to mitigate this risk is to reduce discretionary spending for a period of time if you experience a decline in your portfolio.”
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