Happy Friday Reader ☀️
Welcome back to Safe Money Weekly, where I share retirement income planning strategies, case studies, and ideas to help you retire with more confidence and less uncertainty.
Most retirees are worried about losing money in the market.
And understandably so.
Once the paycheck stops and you begin withdrawing from your investments, a major market decline can have a much bigger impact than it did while you were still working and saving.
But there’s another retirement risk that gets far less attention:
Living a really long time.
That might not sound like a risk, and hopefully, it’s exactly what happens in your own retirement.
But, from a financial planning standpoint, longevity has a unique characteristic:
It compounds almost every other risk you face in retirement!
📉 Market risk compounds
If retirement lasts 30+ years, you’re probably not going to experience just one bad market.
You may live through several recessions, bear markets and periods of significant volatility.... all while withdrawing money from your portfolio.
🔥 Inflation compounds
At 3% inflation, something that costs $10,000 today costs roughly $24,000 thirty years from now.
The longer you live, the more purchasing power becomes a problem.
🏥 Healthcare risk increases
Living longer also increases the probability that you’ll eventually need significant healthcare or long-term care.
And those expenses often arrive later in retirement, when your portfolio has already been supporting you for decades.
💰 Your money simply has to last longer
A plan designed to fund 15 years of retirement looks very different from one that may need to fund 30 or 40.
This creates an interesting planning dilemma.
Being too aggressive can hurt you in the short-term (especially early in retirement).
A major market decline early in retirement combined with withdrawals can permanently damage your portfolio.
But going too far in the opposite direction can be dangerous too.
Being too conservative can really hurt you over the long term, especially if you live longer than expected.
If too much of your retirement money sits in low-growth investments for decades, inflation slowly eats away at your purchasing power.
That’s why I don’t believe retirement planning is about choosing between “safe” investments and “growth” investments.
A better plan usually uses both.
✅ Create dependable income for the expenses that absolutely need to be covered
✅ Maintain enough growth to keep up with inflation and support a potentially very long retirement
✅ Reduce unnecessary portfolio volatility when withdrawals begin
✅ Build flexibility into the plan so you can adjust when markets, taxes and life inevitably change
The goal isn't simply to avoid losing money.
And it isn't to earn the highest return possible.
The goal is to build a retirement plan capable of surviving whatever the next 30+ years throw at you.
That’s a very different problem than accumulating money for retirement.
And it’s exactly why I believe the strategy that gets you to retirement may not be the best strategy once you’re in retirement.
— Matt
P.S. As always, below you'll find all of my newest articles, videos, case studies, and retirement resources.