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Retirement Planning for Volatile Markets

The stock market in 2022 has been volatile due to rampant inflation, Russia’s invasion of Ukraine, and the Federal Reserve’s first interest rate increase since 2018. Knowing how to structure a retirement plan that works in volatile markets is key to your success. Creating a strategic plan that works in up and down markets can be life-changing. Timing the market or even overhauling investments every time the market and economy change isn’t a long-term solution. Taking all your money out of the stock market and creating a massive taxable event can be financially devastating. In this episode, I’ll share my market outlook for 2022, how a strategic plan can reduce financial risk, and my favorite method to create a retirement plan, whether the stock market is bullish or bearish.


The market is attempting to catch its breath as the first quarter of 2022 ends. There was no shortage of events for the market to navigate, including the Federal Reserve’s first interest rate increase since December 2018, Russia’s invasion of Ukraine, and stubbornly high inflation pressures. The outlook calls for current market themes to last throughout most of 2022. The Federal Reserve expects inflation pressures to ease as the year progresses, but there is a risk inflation will remain elevated longer than forecasted due to rising energy prices.

There are many moving parts to pay attention to in the coming months. Investors will be monitoring economic data releases, corporate earnings, and geopolitical issues in eastern Europe for clues about the market’s next move. This year’s U.S. midterm elections will add another dimension as campaign season swings into gear over the coming months.


In your primary earning years, you’re in the accumulation phase. The goal in the accumulation phase is to put away money in 401(k), IRAs, or other retirement accounts and let them grow. As you approach retirement, you’ll be moving into the distribution (spending) phase. In the distribution phase, the goal is not to exclusively increase your money but to limit significant and catastrophic losses.

If you lay down at night to sleep during retirement and the stock market is keeping you up at night, you haven’t passed the pillow test. The pillow test is to be able to be comfortable with the impact outside forces are having on your money. While I believe in the economy and markets, growing your investments is just one of eight parts of a comprehensive plan. Often those who are within a few years of retirement become increasingly uncomfortable with stock market volatility the closer retirement becomes.


A typical instrument I use with clients to help them pass the pillow test is a three-bucket approach to planning. The first bucket is where guaranteed sources of income are allocated, such as Social Security and pensions. The second bucket is where the money used for income in the next 5-10 years, on top of Social Security and pensions, will be drawn from. Bucket two money is money that is invested or positioned with much less risk than growth-minded investments. One of the purposes of bucket two money is to reduce the sequence of return risk. Another purpose the bucket two is to reduce overall risk in a portfolio and utilize investments and products that are more conservative. There are numerous investment and insurance-based solutions for bucket two, and clients can weigh the pros and cons of each before making decisions.

Bucket three is used for money that a client wants to grow and most likely won’t be needed for ten years or more. Bucket three can be used later in life for health care expenses such as assisted living and nursing care. Money in bucket three can also be used to pass on to children or refill bucket two money later in retirement if necessary. Money in bucket three can also be converted to Roth IRAs strategically before Required Minimum Distributions are taken; often, between ages 60-72 are optimal.


If you’ve prepared for retirement and have nice-sized balances in your retirement accounts, and you’re within a few years of retirement, it can be powerful to start to reduce the risk on your portfolio. While each person’s risk tolerance and goals are unique, my experience is that most people I sit down with that are close to retirement say they are conservative and want to limit large losses but are out of alignment and are invested for growth.

As you’re nearing retirement, now is the time to reduce your risk (bucket two) while still utilizing the market to grow your portfolio (bucket three). You don’t want to experience 2008 right before you retire and have to either work longer or retire on less. A good income and investment plan customized to your goals and risk tolerance can put you in a position to weather market volatility with confidence. While nobody likes to see balances go down in investment accounts, if it is money you don’t need for ten years or more, you’ll likely be much less emotional about the market swings.


While none of us can control the economy and market forces around us, the optimal retirement plan, in my opinion, is not about market timing but rather about creating a strategy built for both up and down markets. Using powerful income planning principles makes it possible to reduce risk with a portion of your portfolio and have money participating in market growth.

I suggest you revisit your plan once or twice a year and adapt your strategies based on internal factors (e.g., goals, health, retirement lifestyle) and external factors (e.g., stock market, economy). By making regular adjustments, you can reduce your anxiety, have the confidence that you are on track, and be prepared for a fulfilling retirement.


Do you have a retirement plan? Do you understand your plan? How much confidence does your plan give you? If you don’t have a retirement plan, consider working with a comprehensive fiduciary advisor who can help you with Social Security claiming strategies, creating an income plan, and reducing your taxes through proactive planning. These differences can add more than $100,000 to some retirement plans.

Do you want to work with a firm committed to helping achieve your goals financially and with your family and fulfillment? You can set up an appointment by calling 801-810-8434 or visiting Thrive Retirement Planning at At, click on the “Get Started” tab and schedule a time to talk.