In this episode of Retire with Style, hosts Alex Murguia and Wade Pfau explore how to manage sequence of returns risk in retirement. They break down four key strategies: spending conservatively, staying flexible with spending, reducing investment volatility, and using buffer assets. The discussion also touches on how sequence risk can arise more than once—especially for early retirees—and how having a pension can affect your overall risk tolerance. Throughout the episode, they emphasize the value of starting retirement on solid footing and building a margin of safety into your plan.

Takeaways

• Sequence of returns risk is crucial for retirees.
• Four strategies to manage sequence of returns risk exist.
• Spending conservatively can mitigate risk.
• Flexible spending strategies can adapt to market conditions.
• Reducing investment volatility is essential for stability.
• Buffer assets provide a safety net during downturns.
• Early retirement years are particularly vulnerable to risk.
• A good start in retirement can set the tone for success.
• Pension income can change portfolio risk tolerance.
• Understanding personal risk preferences is key to financial planning.

Chapters

00:00Introduction to Sequence of Returns Risk

07:33Understanding the Four Strategies to Manage Risk

17:14Exploring Multiple Sequence of Returns Risks

19:30Portfolio Risk and Pension Considerations

Links

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