Retirement strategies during market and geopolitical uncertainty

Retiring in uncertain times can feel unsettling. Market swings from geopolitical conflict, inflation fears, shifting government policies, and rapid technological change are stressful alone but the reality that retirement portfolios may have less time to recover from a major downturn magnifies the impact. Yet uncertainty does not have to derail a successful retirement. With the right planning, investors can build portfolios designed not only to weather volatility, but also to provide confidence and stability through it.

The key is focusing on what you can control. Rather than reacting emotionally to every headline or market move, near retirees and new retirees should concentrate on four core strategies that strengthen financial resilience:

• Diversify within asset classes

• Create reliable income-generating investments to minimize sequence of returns risk

• Develop thoughtful withdrawal strategies that support both spending needs and legacy goals

• Remain disciplined enough to stay invested during turbulent periods

Together, these principles can help retirees protect their portfolios — and their peace of mind — even in the most “interesting” of times.

Diversification as Retirement Approaches: Beyond Broad Categories

Many investors think diversification simply means owning a mix of stocks and bonds. But for people nearing retirement, true diversification goes much deeper and assumes greater importance.

A resilient retirement portfolio is built not only by spreading money across broad asset classes, but also by diversifying within them. Rather than trying to pick winning individual stocks or bonds, our approach relies on asset class investing: owning broadly diversified funds that capture entire segments of the market. This means holding thousands of companies across different sizes, styles, and regions, rather than concentrating on a handful of names.

For the stock side of the portfolio, that means blending exposure to large and small companies, value and growth oriented businesses, and both U.S. and international markets. Small and value-oriented companies have historically offered higher expected returns over time, though with more short-term volatility, while large, more stable companies can help smooth out returns during turbulent periods. Blending these asset classes in the right proportions, rather than trying to guess which individual companies will outperform, is what builds real resilience into a portfolio.

Diversification also means avoiding too much concentration in any one part of the market. Even large cap stocks as a group can become risky when investor enthusiasm gets overheated, as many worry may be happening today with certain AI-related investments. Maintaining exposure across company sizes and styles, rather than following whatever segment of the market is currently in favor, helps reduce that risk.

The same principle applies to fixed income. Rather than building and managing a portfolio of individual bonds, we use diversified, high-quality bond funds that spread risk across many issuers and maturities. Shorter duration bond funds tend to be more stable when interest rates rise, and can help reduce volatility while still generating steady income. This approach avoids the concentration risk, illiquidity, and ongoing maintenance that come with holding individual bonds.

As you approach retirement, capital preservation becomes more important. It can be tempting to chase whatever investments are producing the biggest headlines or the highest recent returns, especially when friends or coworkers are talking about their gains. But retirement investing is no longer solely about maximizing growth. It is about creating stability, income, and long term confidence. A well diversified, asset class-based portfolio may not always lead the market during boom times, but it is far better positioned to help you weather difficult periods and stay financially secure throughout retirement.

Minimize Sequence-of-Returns Risk

One of the biggest financial dangers facing new retirees is sequence-of-returns risk. This is the risk that poor market performance occurs just before retirement or during the first few years after retiring, when you have started withdrawing money from your portfolio to fund your lifestyle. For example, a portfolio that experiences strong gains early in retirement and losses later often fares much better than a portfolio that suffers major losses at the beginning, even if both portfolios earn the same average return over time.

Why is the timing of returns so important? The reason is simple: when markets decline early in retirement, retirees may be forced to sell investments while prices are down to cover living expenses. That means selling more shares than planned at depressed values. Even though markets historically recover over time, the damage can be difficult to reverse because there is less remaining capital left invested to participate in the recovery. Over time, this can significantly increase the risk of running out of money earlier than expected.

Fortunately, there are practical ways to reduce sequence-of-returns risk and make a retirement portfolio more resilient.

The most important strategy is maintaining a meaningful cash reserve. Near retirees should consider keeping enough cash or short-term, low-volatility investments to cover at least one year (ideally closer to two years) of living expenses. This creates a financial buffer that allows you to continue meeting spending needs during market downturns without having to sell long-term investments at unfavorable prices.

Having a plan to replenish those cash reserves is equally important. During strong market periods, investors can systematically refill their cash bucket by trimming gains from stocks or other growth investments. This approach helps create discipline and reduces the temptation to make emotional decisions during periods of market stress.

Another approach is to stop automatically reinvesting the dividends and interest generated by your mutual funds or ETFs and instead direct that income into your cash account. You can also consider using short-term bond funds as a source of predictable, lower-volatility cash flow, either drawing from them for living expenses or reinvesting depending on market conditions. This strategy can provide steadier cash flow while reducing the need to sell equity funds during downturns.

Withdrawal Strategies for Volatile Times

If you are nearing retirement, you’ve probably come across the rule of thumb that says retirees can withdraw 4% of their retirement savings each year and won’t outlive their savings. While that guideline can be a useful starting point, a “set it and forget it” approach can be risky because real life rarely follows a straight line. Markets fluctuate, inflation changes spending needs, and unexpected expenses arise. Instead of relying on a rigid rule, retirees are often better served by building flexibility into their withdrawal strategy.

The sequence-of-returns risk discussed earlier is one of the biggest risks that retirees face. If you withdraw the same amount from your portfolio in downturns as you do when markets are strong and you haven’t developed a cash bucket to fund your retirement, your withdrawals may have an outsized impact on how long your savings last. For that reason, it can help to adjust spending temporarily when markets are volatile. If the market is down significantly, consider reducing withdrawals by postponing discretionary expenses. You might delay a kitchen remodel, a major vacation, or buying a new car for six months or a year. Even modest spending reductions during downturns can give your portfolio more time to recover.

On the other hand, when markets have performed well and your portfolio has grown, you may have more flexibility to increase withdrawals for travel, gifts to family members, or other lifestyle goals. Viewing retirement spending as something that can adapt over time—rather than remain fixed every year—can make a retirement plan more durable.

It can be helpful to match income sources with the expenses they are intended to fund. Essential expenses, such as housing, food, healthcare, and insurance should ideally be covered by more stable income sources like Social Security, pensions, cash reserves, or short-term bonds. Discretionary expenses, such as travel, entertainment, or luxury purchases, can be adjusted more easily depending on market conditions. This framework can make spending decisions less emotional during turbulent periods.

Taxes should also be part of the conversation. Withdrawals from traditional retirement accounts such as 401(k)s and traditional IRAs are generally taxable, while Roth IRA withdrawals may be tax-free if certain conditions are met. Coordinating withdrawals across different account types can help manage your tax bracket and potentially extend the life of your savings. At Gold Medal Waters, a tax-efficient withdrawal strategy is a key part of our work for our retired clients.

Remain Disciplined

If you have diversified, addressed sequence of return risk, and created a flexible withdrawal strategy you will have a much easier time implementing our final tip for new retirees: don’t panic. Retirees who panic and sell investments after markets have fallen often lock in losses that may have recovered over time.

Simply knowing that you have a plan in place can be a stabilizing force when headlines are unsettling. Retirement is not just about maximizing returns. It is also about creating a strategy that allows you to maintain confidence, flexibility, and financial security through changing market conditions.

You Can Prepare for Retirement Even Though the World is Uncertain

Uncertainty is unavoidable, but being prepared is a choice. Markets and geopolitics will always change, and a thoughtful plan for funding your retirement reflects this. That plan should include appropriate diversification, income-generating strategies, and a commitment to staying the course when things get bumpy. Focus less on making predictions and more on being prepared.

If you are concerned about your plan, please reach out to us if you are a Gold Medal Waters client. If you are questioning your allocation or need financial advice, book a free, initial consultation to learn how Gold Medal Waters can help.

Disclosure: Advisory Services are offered through Gold Medal Waters, a Registered Investment Advisor. This post and material presented are for informational and illustrative purposes only, and do not constitute investment advice and is not intended as an endorsement of any specific investment. As such, this material is not client-specific, we adjust in individual portfolios based on each client's financial plan, income needs, risk tolerance and total asset allocation. Interactive checklists are made available to you as self-help tools for your independent use and are not intended to provide investment advice. While Gold Medal Waters believes information derived from third-party sources to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability about your individual circumstances.  Investors should carefully consider the investment objectives, risks, charges, and expenses associated with any investment. The information discussed is not intended to render tax or legal advice. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.  Investing involves risk including the potential loss of principal, and unless otherwise stated, are not guaranteed. Past performance does not guarantee future results. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Geopolitical events are unpredictable and can lead to significant market liquidity issues and volatility that may not be captured in historical models. Consult your financial professional before making any investment decision.