When most people think about retirement, they picture freedom. Freedom from the nine-to-five routine, freedom to travel, freedom to enjoy time with family, and freedom to finally focus on the things that matter most. But with that freedom comes a different kind of responsibility – the responsibility of making sure your money lasts as long as you do. And in today’s market environment, that’s no small task.
We call this longevity risk – the possibility of outliving your assets. For retirees, longevity risk doesn’t live in isolation. It intersects with something else that has been front and center in recent years: market volatility. Put the two together, and the stakes get much higher.
The Double Hit of Volatility in Retirement
When markets swing, everyone feels it. But for retirees who are drawing from their portfolios, volatility can do double the damage. Why? Because you’re no longer just riding out the ups and downs with decades of earning and saving ahead of you. You’re withdrawing funds at the same time.
Imagine this: you need $50,000 a year from your portfolio to cover living expenses. In a “normal” year, you withdraw that amount and your remaining balance has time to recover if markets dip. But in a year when markets are down 15-20%, your withdrawals lock in those losses. You’re selling more shares at lower prices, and that leaves fewer assets to participate when markets rebound.
Over time, this “snowball effect” can dramatically shorten the life of a portfolio. This is what advisors mean when they talk about sequence-of-returns risk – the order in which you experience good years and bad years in the market matters a great deal in retirement. Two investors can earn the same average return over 20 years, but if one hits a string of poor returns early on while taking withdrawals, their nest egg may deplete far faster than the other’s.
Why This Matters More Today
This risk feels especially relevant right now. We’re living in a world of sticky inflation, interest rates that remain higher for longer, and global headlines that seem to spark sudden market swings. For retirees, that volatility isn’t just noise – it’s directly tied to the income they depend on.
At the same time, life expectancy continues to rise. Many retirees today should plan for 25 to 30 years of retirement – longer than most of their parents or grandparents did. That’s three decades of market cycles, policy changes, and personal health expenses to plan for.
Tools to Steady the Course
The good news? You’re not powerless in the face of longevity risk and volatility. There are strategies designed to smooth out the ride and help ensure your portfolio lasts through retirement.
Systematic Withdrawal Strategies
Think of this as setting rules of the road. Instead of taking out whatever feels right each year, a systematic withdrawal plan sets a sustainable percentage or dollar amount. Approaches like the “4% rule” (with adjustments for today’s environment) or dynamic withdrawal models can create consistency while still allowing flexibility when markets are turbulent.
Annuities for Guaranteed Income
While not for everyone, annuities can provide something markets can’t guarantee – steady income for life. For some retirees, allocating a portion of assets to an annuity helps cover essential expenses like housing, food, and healthcare. That way, the rest of the portfolio can be invested with a longer-term growth mindset.
Option Overlays and Risk Management Tools
More advanced strategies, like using option overlays, can help protect portfolios during downturns or generate additional income in flat markets. Think of these as financial “shock absorbers” – they don’t eliminate bumps in the road, but they can reduce the jolt.
Diversification and Bucketing
Sometimes the simplest tools are the most effective. Having different “buckets” of money – short-term cash, medium-term bonds, and long-term equities – can ensure you’re not forced to sell stocks during a market drop just to meet near-term needs.
Bringing It Back to the Big Picture
Ultimately, the goal isn’t just to survive market volatility. It’s to thrive in retirement with peace of mind. Money is the tool that funds your lifestyle, but the real strategy is about your personal journey. How do you want to spend your retirement years? What legacy do you want to leave?
When we build plans for retirees, we’re not just crunching numbers – we’re helping align portfolios with those bigger goals. Managing sequence-of-returns risk, planning for longevity, and using tools to smooth volatility are all pieces of the puzzle. But the picture is your life, not your portfolio statement.
We Can Help
Markets will always be unpredictable. But with the right strategy, retirees don’t have to feel like they’re at the mercy of every headline or market swing. By understanding how longevity risk and volatility intersect – and by taking steps now to manage them – you can give yourself the confidence to focus less on the markets and more on enjoying the freedom you’ve worked so hard to earn.
Our financial advisors can help you put strategies in place that seek protection of your income, manage risk, and keep your retirement goals on track – even in uncertain markets. If you have questions, please reach out to us. We’d be glad to help you navigate the years ahead with clarity and confidence.
NorthCoast Asset Management is a d/b/a of, and investment advisory services are offered through, Kovitz Investment Group Partners, LLC (Kovitz), an investment adviser registered with the United States Securities and Exchange Commission (SEC). Registration with the SEC or any state securities authority does not imply a certain level of skill or training. More information about Kovitz can be found at www.kovitz.com.
NorthCoast and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
The information contained herein has been prepared by NorthCoast Asset Management ("NorthCoast") on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions. © 2025 NorthCoast Asset Management.
PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS.
This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL.
The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties.
