Let’s assume you’re ahead of your peers. You’ve saved, invested, and reduced your debts. Maybe you’ve even met with a financial professional to review your retirement income options. But if you rely solely on traditional strategies, you may still find yourself at a disadvantage in retirement.

Preparing for your financial future requires accounting for factors beyond your control. While you can choose a target retirement date and budget for monthly income, projecting portfolio returns, life expectancy, taxes, inflation, and health care needs involves a significant degree of uncertainty. Even a small error in these assumptions can derail your plan. In our experience, the most problematic factor is the assumed average rate of return on investments.

The Flaw of Averages

Mark Twain once remarked that there are “three kinds of lies: lies, damned lies, and statistics.” Numbers can tell almost any story, depending on how they are interpreted.

Consider this example:

Suppose your retirement portfolio suffers a 40% loss in a downturn similar to 2008. If your portfolio was worth $1 million, it would fall to $600,000. The following year, a 40% rebound would lift the balance to $840,000—not back to your original $1 million. Although the average rate of return over those two years is zero, the actual rate of return is negative 16%.

This distinction matters. Many financial plans, however, rely on averages that may paint a misleading picture. Markets are volatile, not smooth or predictable. A sound retirement plan must recognize this reality.

Experience shows that the five years before and after retirement are especially vulnerable to market volatility. At that point, your savings are at their highest—and therefore at greatest risk. In 2008, many people planning to retire were forced to delay their plans or accept a lower standard of living. Losses near retirement can carry long-lasting consequences, yet many investors still rely on “age-appropriate” stock-and-bond mixes that may fail to protect against critical timing risks.

Keeping It Real

Some seasoned investors may wonder: why worry about market swings? Isn’t patience the key to weathering volatility? After all, panic selling is often the real culprit.

The truth is, timing changes everything. When you’re working, a market decline hurts—but you still have a paycheck and contributions that help your portfolio recover. Near or in retirement, however, the story is different. A market drop reduces not only your account value but also the income you rely on. Worse, withdrawals during downturns lock in losses and limit recovery.

A Better Plan

A strong retirement plan should be designed to withstand volatility while delivering income when you need it, regardless of market conditions. Nobody wants to be forced back into the workforce or downsize their lifestyle because of poor timing. Mitigating volatility risk is essential to staying on track.

This doesn’t mean abandoning the market. Stocks remain important for long-term growth. But it may be wise to diversify into assets with low correlation to equities—such as bonds held to maturity or annuities with principal protection, backed by financially strong insurers. The goal is to hedge against short-term risk while preserving your income stream.

We are now more than a decade into one of the longest bull markets in history. The S&P 500 has averaged annual returns of about 15% during this stretch. It’s tempting to assume the good times will continue, but the market won’t send a warning before heading in the opposite direction.

Here’s how to get started:

• Assess the impact of a market downturn on your retirement plan.
• Identify the rate of return your portfolio must achieve to sustain your retirement income.
• Compare scenarios. If you only need a 3% return versus 6% to meet your goals, you’ll approach risk differently. This awareness empowers you to balance growth-oriented and safety-oriented strategies effectively.

To all the diligent savers: do yourself a favor—leave averages to baseball statisticians. Your financial future is too important to leave to chance.

A Disciplined Perspective in an Uncertain Moment

At West Advisory Group, we’ve learned that market turning points are rarely clean or predictable. That’s why balance sits at the core of our PEAK FORMula.

We’ve seen cycles of rate cuts, pauses, and reversals, and we know that while we can’t control the Federal Reserve’s next move, we can control how prepared your retirement plan is for multiple outcomes.

From a professional standpoint, this environment calls for measured expectations. A rate cut may provide near-term relief, but slower or more limited action thereafter is a realistic possibility. A resilient yet decelerating economy, mixed growth signals, and shifting volatility reinforce why diversification and disciplined risk management are non-negotiable—especially for investors within five years of retirement who are preparing to move from accumulation to distribution.

If inflation remains contained and the Fed maintains a steady hand, markets may continue to advance. If inflation runs hotter, volatility could return quickly, serving as a reminder of why patience, planning, and preparation matter more than prediction.

The PEAK FORMula was built for moments like this. It’s designed to help you stay grounded through changing market narratives, make intentional decisions rather than reactive ones, and ensure your portfolio supports the income, flexibility, and confidence you’ll need in retirement. 

Our role isn’t to guess the next headline; it’s to help you navigate the ebbs and flows of retirement life with a strategy built to endure them.