By Jonathan I. Shenkman
The current war in Iran and the resulting turbulence in global financial markets have understandably made many investors uneasy. Headlines about geopolitical instability and market volatility can rattle even the most disciplined savers.
It is a uniquely difficult challenge for individuals who are approaching retirement. After working for four decades or more, they are eager to step away from their careers and begin the next phase of life. For them, a conflict on the other side of the world isn't necessarily a reason to postpone retirement. However, market downturns can be especially dangerous during the early years of retirement, when portfolios are most vulnerable to what is known as sequence-of-returns risk. If retirees are forced to withdraw funds from a declining portfolio, those losses become locked in and can permanently impair long-term financial security.
Preparing clients to retire into uncertain or declining markets requires thoughtful planning and flexibility. The strategies used often depend on where someone is in the retirement planning cycle. Individuals who are still working typically have more options available to them, while those who are already retired may need to rely on different tools. Below are seven strategies I discuss with clients in my practice when markets become turbulent, with the goal of ensuring the client can remain retired without significant financial stress.
Build a cash or short-term bond buffer: I often encourage clients who are still working, but are approaching retirement, to begin increasing the amount of cash they hold in their checking accounts or in short-duration fixed income investments. The goal is to avoid withdrawing money from the investment portfolio when markets are falling.
Maintaining one to three years' worth of spending in cash or short-term bonds allows retirees to fund their expenses without selling equities at depressed prices. When markets eventually recover, those investments remain intact and can participate in the rebound.
Accelerating Social Security benefits: Conventional retirement planning wisdom generally encourages delaying Social Security benefits until full retirement age, or even age 70, to maximize the guaranteed income stream. Larger monthly payments later in life can provide valuable protection against longevity risk.
However, when someone is retiring during a prolonged market drawdown, it's worth running the numbers to see whether claiming benefits earlier could serve as a bridge.
By relying more heavily on Social Security income for the first few years of retirement, clients may be able to reduce withdrawals from their investment portfolios while markets are depressed. This approach isn't ideal for everyone, but in certain circumstances it can help mitigate sequence-of-returns risk and preserve long-term assets.
Income flooring: This is another concept that can be extremely helpful during volatile periods. The idea behind income flooring is to ensure that essential expenses, such as housing, food, and healthcare, are covered by reliable sources of income. These sources might include Social Security, pensions, or annuities. When core expenses are funded by guaranteed income streams, the investment portfolio can be used primarily for discretionary spending, such as travel, entertainment, or gifts.
Personally, I tend to be cautious when recommending annuities because of their complexity and costs. That said, a Single Premium Immediate Annuity, often referred to as a SPIA, may make sense for certain clients as part of a broader retirement income strategy.
Allocating a portion of assets to a SPIA can provide a predictable income stream that covers basic living expenses regardless of market conditions. Knowing that essential expenses are secure can make it much easier for retirees to remain calm and financially stable during periods of market volatility.
Roth conversion opportunities: One strategy worth considering is performing partial Roth conversions while asset values are temporarily depressed. When investors convert funds from a traditional IRA to a Roth IRA, they must pay taxes on the amount converted. If markets have declined, however, those taxes are calculated on lower account values. Should the investments later recover within the Roth account, the growth becomes tax-free.
For clients who are still employed and have sufficient cash available to pay the tax bill, a market downturn may represent an ideal time to execute these conversions. Years later, when withdrawals from the Roth IRA are taken tax-free, the downturn that once caused anxiety may ultimately look like a strategic opportunity.
Continuing to work: Even modest income during the early years of retirement can dramatically reduce pressure on an investment portfolio. This doesn't necessarily mean abandoning retirement altogether. In many cases, delaying retirement by six months to a year or transitioning to part-time work can provide significant financial flexibility.
The current geopolitical situation may resolve quickly, or it could create prolonged market instability. Continuing to earn income from wages for a short period allows soon-to-be retirees to wait out volatility and avoid withdrawing money from their portfolios. A small adjustment to retirement timing can sometimes make a very large difference in long-term outcomes.
Flexible spending: Spending flexibility is one of the most powerful tools available to folks in retirement. Many retirees follow a traditional strategy of withdrawing a fixed inflation-adjusted percentage of their portfolio each year, which is often referred to as the four-percent rule. While this framework can work well over long periods, it may be too rigid during market downturns.
Instead, I often encourage clients to adopt a more flexible withdrawal strategy. When markets decline significantly, temporarily reducing spending by five to 10 percent can meaningfully improve the sustainability of the portfolio. These reductions don't need to be permanent; they simply provide breathing room while markets recover.
Strategic portfolio rebalancing: When stocks fall relative to bonds, disciplined rebalancing allows investors to purchase equities at lower prices while maintaining the portfolio's intended risk profile. In some cases, broad market declines also provide an opportunity to reposition portfolios that may have become overly concentrated.
For example, a client who has long wanted to reduce a large position in a single stock might use a market selloff to trim that position. This can help derisk their portfolio by reinvesting the proceeds into more diversified investments. Lower asset prices may also result in reduced capital gains taxes compared with selling at market highs. In this way, volatility can create opportunities to improve portfolio structure for the long term.
A key truth about retirement planning is that the first five to 10 years of retirement matter the most. If a portfolio can successfully navigate this early period without excessive withdrawals during major market declines, the probability of long-term financial success increases significantly.
For retirees and those approaching retirement, uncertainty surrounding geopolitical events and market volatility can feel unsettling. With careful planning, flexibility, and thoughtful adjustments, it is entirely possible to stay on track even when markets are less than cooperative. The goal isn't to predict every market movement, but to build a strategy resilient enough to withstand them.
Jonathan I. Shenkman , AIF, is the president and chief investment officer of ParkBridge Wealth Management and is based in New York. His practice addresses retirement planning, including collaborating on tax, estate, and financial planning strategies. He is the author of a children's book titled, D is for Diversification: The ABCs of Personal Finance . He's hosting a webinar on March 24 on retirement planning .
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March 19, 2026 14:04 ET (18:04 GMT)
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