Avoiding Market Risk in Retirement: A Guide

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Market losses hit retirees harder than accumulators. Learn why sequence-of-returns risk is so dangerous and which safe money strategies eliminate it entirely. Key Takeaways Market losses can significantly impact retirees due to sequence-of-returns risk, making careful planning essential. Implementing guaranteed solutions can help protect retirement savings from market volatility. Consider using retirement calculators to assess your financial readiness. Diversifying income sources with fixed annuities can provide stability during retirement. Consult a SafeMoney certified advisor to develop a personalized retirement strategy. Related Articles 3 Retirement Risks Annuities Solve And Why They Matter Understanding Fixed Index Annuities in Today's Market Building a Personal Pension for Retirement Security Does A Retirement Annuity Make Sense For Your Golden Years Quick Answer Market risk affects retirees more severely than workers because they cannot afford to wait out downturns. Sequence-of-returns risk can permanently damage a retirement portfolio. Safe money strategies, such as fixed indexed annuities, are designed to mitigate this risk by securing your principal. SafeMoney Editorial Team  |  Reviewed by Licensed Financial Professionals  |  Updated Regularly Understanding Market Risk in Retirement Market risk in retirement is the potential for your investments to lose value due to economic downturns. This risk is particularly concerning for retirees because they are often withdrawing funds for income rather than accumulating wealth. The sequence-of-returns risk is a critical factor, as early market declines during retirement can lock in losses that are challenging to recover from. The Impact of Sequence-of-Returns Risk Sequence-of-returns risk refers to the order in which investment returns occur. For retirees, a market downturn early in retirement can have devastating effects on a portfolio. Unlike younger investors who have time to recover, retirees may find it impossible to regain lost ground if they are withdrawing funds during a downturn. Historical Market Performance To understand the impact of market volatility, consider the S&P 500's performance over the past 25 years, which includes significant events like the dot-com bubble and the 2008 finan