Insights & Resources

Let’s be honest—nothing makes future retirees sweat like a big red arrow on the market report. If you’ve ever caught yourself thinking, “Maybe I should delay retirement until this blows over,” you’re not alone. It’s a natural reaction. Market downturns can feel like a flashing warning sign, telling you to hit pause on your plans.

But here’s the thing: markets falling isn’t the problem. The real issue? Retirement plans that assume everything will go right.

A strong retirement plan isn’t built for perfection—it’s built for reality. That means ups, downs, flat years, and surprise inflation spikes. It means preparing ahead of time—not just reacting when things go sideways.

This article walks you through how to create a retirement plan that can take a few punches and still keep moving forward. You’ll learn how to protect your income, manage risks early on, and avoid panic-mode decisions when the headlines aren’t great.

Let’s dive into the strategies that can help you retire with confidence—even when the market gets rocky.

A Plan That Expects the Unexpected: Why Flexibility is Critical

If there’s one thing we know about markets, it’s this: they don’t move in straight lines. And yet, so many retirement plans are built assuming steady, linear growth. That’s a recipe for trouble.

Let’s use a Canadian reference you’ll appreciate. Think about driving in a Toronto winter. You don’t assume clear roads every day. You install winter tires, toss a snow brush in the trunk, maybe even check the salt on your boots before heading out.

Now apply that logic to your finances. Hoping for sunshine year-round is naïve. That’s why your plan needs to assume there will be bad stretches—slow markets, rising inflation, unexpected expenses. A smart retirement plan includes shock absorbers.

Here’s how that plays out in real life:

• Allocating a “safety bucket” of assets you won’t have to sell when markets drop.
• Projecting income based on varied return sequences instead of average growth.
• Using conservative assumptions for withdrawal rates and inflation.

If your plan expects these little storms, you’ll handle them without hitting the panic button. That’s a huge emotional win—and a financial one, too.

The Real Risk? Running Out of Money, Not Market Dips

We get it. Watching your portfolio drop by 15% or 20% in the first year of retirement feels awful. But here’s something more dangerous: permanently shrinking your savings because you pulled money out during a bad stretch. That’s where the real long-term damage happens.

You want to know what your portfolio can afford to pay you—not just in a good year, but over 25 or 30 years. That takes forecasting beyond just “this year’s market performance.”

Let’s run a basic example:

You retire at 65 with $800,000 invested. Your retirement plan assumes a 6% annual return and 2% inflation. Most planners use a “safe withdrawal rate”—something like 4–5%—meaning you could start at about $43,000 per year.

But what if markets drop 20% in year one? Suddenly, your balance dips to around $640,000. If you keep withdrawing $43,000 annually without adjustment, you’re chewing into a smaller pie—faster than expected.

That’s why forecasts need a “bad year” baked in from the start. Plans that use fixed 6% assumptions regardless of environment? Not good enough. The smarter method is to test different scenarios—soft markets, flat returns, higher inflation—and confirm the plan holds steady.

Because while bad markets sting, running out of money at 80 hurts a whole lot more.

Sequence of Returns: Why Timing Matters More Than You Think

Here’s where things get a bit technical, but stay with me—it’s important.

Let’s talk about “sequence risk.” It’s the concept that when your investment returns happen can matter more than how much you earn over the long haul.

Imagine this: Two people retire with $1 million each. Over the next 25 years, both earn the same average return—say, 6% per year. But for Retiree A, the first three years are -15%, 0%, +5%. For Retiree B, the bad years come much later—maybe years 15, 16, and 17.

Who ends up with more money at the end?

Answer: Retiree B—by a long shot. Because market losses early in retirement shrink your base—and since you’re withdrawing income during that time, you’re locking in losses and leaving less money to recover.

The fix? Build flexibility into those early retirement years:

• Delay big withdrawals if markets are soft initially.
• Have a bigger cash or bond “buffer” to cover your expenses.
• Use part-time income, if possible, to reduce portfolio strain.

This kind of runway helps avoid locking in losses—and gives your portfolio breathing room to bounce back.

Design with Buckets: Short-Term vs Long-Term Funds

You might’ve heard of the “bucket” strategy. It’s a way to break your investments into different time horizons, each serving a specific role.

Here’s how that can look:

• Bucket 1 – Cash & Short-Term (1–2 years of income): GICs, high-interest savings, or short-term bonds to give you stability.
• Bucket 2 – Medium-Term (3–7 years): Conservative investments like balanced mutual funds or laddered bond portfolios.
• Bucket 3 – Long-Term Growth (8+ years): Equities, ETFs, and alternatives for inflation-fighting growth.

This structure means if stocks fall, you’re pulling income from short-term assets, not forced to sell growth pieces during dips. Your “growth bucket” has time to recover—just like it’s supposed to.

Real example: Let’s say you need $50,000 annually. You might keep $100,000 in your safe bucket (2 years of income), and build the rest of your plan around producing income from the other buckets.

This works beautifully for retirees who say, “I want to sleep at night without constantly watching the markets.” Hint: that’s most retirees.

Be Flexible With Withdrawals: It Doesn’t Always Have to Be the Same

Here’s something rarely talked about: good retirement income isn’t always fixed. If markets are flying, it might be okay to spend a bit more. But during tough years, scaling back can save your plan long-term.

Let’s go back to our earlier figure—$43,000 in annual withdrawals. Suppose a market downturn shaves off a few hundred grand. Instead of stubbornly sticking with the $43,000, maybe that year you drop to $35,000. It’s not forever—just until things stabilize.

This kind of “guardrail” strategy protects you from cannibalizing your retirement when returns are down. It doesn’t need to feel punishing. You might hold off on a big trip. Delay a new car or wait six months to update the kitchen.

That’s not failure—it’s a winning play. And when the rebound comes (as it typically does), you’re still in the game, not trying to recover from a financial fumble.

Balance Growth and Stability: Avoiding the Comfort Trap

We’ve seen people go hard to one extreme: either they lean overly conservative and lose to inflation—or they go all-in on aggressive growth, then get cold feet at the worst time and pull out.

Strong retirement portfolios mix both. You need your portfolio to grow over decades. But you also need holdings that don’t tank in every downturn.

What works?

• A diversified core portfolio: Canadian and global ETFs, dividend-paying equities, and fixed income in the right ratios.
• Active tax-planning across accounts: RRIFs, TFSAs, and corporate-class funds working together.
• Key layers of safety: GIC ladders, real-return bonds, or even annuity-style products for some.

It’s all about finding that sweet spot—enough growth to outpace inflation, enough structure to avoid panic.

Let me say this clearly: if you constantly feel nervous about the market, your portfolio might be too exposed. But if you’re super relaxed and just in GICs, you might not keep up. The middle is where long-term success lives.

Expect Imperfection and Build With That in Mind

If you take nothing else from this article, remember this: your plan shouldn’t depend on everything going perfectly.

Because it won’t. There will be stretch years where markets feel stuck. Interest rates climb. Headlines get loud. That cottage reno costs more than you thought. Life, in other words, will happen.

But here’s the upside—when you include stability buckets, flexible withdrawal rules, and a long-term mindset from the start, you can calmly respond instead of frantically reacting.

And that’s the difference between someone who stays the course—and someone who pulls the plug too early, only to regret it later.

Final Thoughts: Build a Retirement Plan That Stands Tall in Every Season

Let’s wrap it all up.

A real retirement strategy isn’t built to flinch when the market sways. It’s built knowing that some years will punch harder than others. It leans on smart asset buckets, keeps income flexible, and aims for steady—not explosive—growth.

If your current plan feels too fragile—maybe everything hinges on a 7% return, or you’re stuck deciding between risk and comfort—there’s probably a better way forward. We help build custom retirement strategies that assume messiness, not perfection.

That way, you’re not left second-guessing every headline, wondering if you’ll need to go back to work just because the market took a dip.

We work with business professionals, executives, and families to grow and protect their wealth using our Wealth Plan formula. To discuss our approach and if it is the right fit for you, we invite you to schedule a no-obligation discovery consultation.