How to Protect Your Retirement Income

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One of the biggest concerns for people approaching retirement is the possibility of a major market downturn at the wrong time.

For someone who is still 20 or 30 years away from retirement, a difficult market year may feel easier to recover from. There is often more time to continue contributing, stay invested, and wait for the market to improve.

However, for someone who is 60, 65, or already retired, a major market decline can have a much greater impact.

The video above featuring Brandon Lenhoff explains why this issue is so important.

Brandon began his career during the 2008 and 2009 financial crisis. During that time, he saw many people lose a significant portion of their retirement savings because too much of their money was exposed to market risk.

For some families, the losses were so severe that they had to delay retirement, reduce spending, return to work, or completely change the lifestyle they had expected to have.

It was difficult to watch, and it is one of the reasons Brandon believes so strongly in helping people create a more balanced retirement strategy.

A major market downturn can be especially damaging in retirement because of something known as sequence of returns risk.

This refers to the risk of taking withdrawals from retirement accounts while the market is down.

For example, someone with $1,000,000 saved for retirement may feel comfortable withdrawing money each year for income. But if the market experiences a major decline and the account drops significantly, continuing to take withdrawals from a lower balance can make it much harder for the account to recover.

This is why many people begin shifting part of their retirement savings into more conservative strategies as they get older.

One common approach is to create different “buckets” of money for different purposes.

For example, one bucket may remain invested for long-term growth. Another bucket may be focused on protection and stability. A third bucket may be set aside for short-term cash needs.

This type of strategy can help create more flexibility during market downturns.

Instead of being forced to withdraw from investment accounts when the market is down, someone may be able to rely on money from a more conservative bucket.

Fixed indexed annuities are often used as part of this protected bucket strategy.

A fixed indexed annuity is an insurance product designed to provide growth potential linked to a market index without direct exposure to market losses.

For some individuals, this may create greater peace of mind because they know a portion of their retirement savings is not fully exposed to stock market volatility.

For example, someone with $800,000 saved for retirement may choose to keep part of that money invested for future growth while moving another portion into a fixed indexed annuity for more protection.

This does not mean avoiding growth completely. It simply means creating a better balance between growth and protection.

The closer someone gets to retirement, the more important this balance often becomes.

Protecting retirement savings does not mean being fearful of the market. It means understanding that preserving part of what you have built can be just as important as continuing to grow it.

Every person’s situation is different, which is why there is no one-size-fits-all answer.

The right strategy depends on your age, retirement timeline, goals, risk tolerance, and income needs.

Working with a licensed professional can help you better understand your options and determine whether creating a safer bucket for part of your retirement savings may make sense for your situation.

This content is for educational purposes only and is not intended as financial, tax, or legal advice.

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