Keep retirees focused on the long view when markets falter

In September 2007 I made the career shift from airline pilot to financial planner. The transition was driven by the widespread lack of retirement literacy I saw among my pilot buddies and by a lifelong fascination with the financial markets nurtured in me by my father, a CFO, from a young age.

I made the transition at the peak of the financial markets. At the time, I believed that retirement planning was mostly about building optimal portfolios, maximizing return-per-unit on risk on an efficient frontier and finding the mathematically optimal mix of assets.

That view didn't last long. 

In December 2007 the markets crashed, clients panicked and everything I thought I knew about retirement planning was tested. I saw firsthand that having the right portfolio doesn't mean much on paper if people couldn't stick with it in practice. It was a wake-up call that shapes how I approach every client relationship today.

Retirement isn't about numbers to clients, it's about life transitions. The chief role of a retirement planner is to guide clients through a series of decisions over time — with all the complexity, uncertainty, and emotion that comes with those decisions.

READ MORE: Confronted with college costs, parents reach for their 401(k)s

No one magic number

"How much can I safely take out each year?" This is the question that keeps many retirees awake at night. Last year, a 65-year-old client who was about to retire came to me asking exactly this, worried about "sequence of returns risk" — when poor returns happen at the beginning of retirement —  after seeing friends struggle through the 2022 market decline. 

Rather than assigning him a static withdrawal rate, we implemented a dynamic series of spending adjustments based on portfolio performance. When his portfolio performed well, he would increase discretionary spending. When markets struggled, he would reduce nonessential expenses. 

READ MORE: How financial advisors can rein in overzealous retiree spending 

In our discussion, we identified which expenses — housing, health care and basic groceries —  were truly essential versus discretionary outlays like travel, dining out and gifts. The result? He has confidence in both good times and bad because the process adapts to market conditions rather than fighting them. Notice what didn't come up in solving the problem: a single product. Just process.

Bucket lists

"Which account should I tap first?" A 62-year-old client — an executive in the tech industry — recently asked this question while considering early retirement. She had money in her 401(k), Roth IRA and taxable accounts, but didn't know where to pull from first. We built a tax-efficient withdrawal strategy overlaid with a "bucketing" strategy across time horizons. 

Her near-term bucket (years 1-5) draws from taxable accounts and lower risk investments first, allowing tax-deferred accounts to continue growing. Her intermediate bucket (years 6-15) incorporates strategic Roth conversions during lower-income years before Social Security and required minimum distributions kick in. Her long-term bucket (years 16+) focuses on legacy planning and tax-free growth.

The behavioral benefits of bucketing became clear during this year's market volatility. When she called me, worried about her portfolio balance, I reminded her that her spending for the next five years came from the stable, near-term bucket. The long-term bucket could ride out the storm.

Here again, the underlying products to make this happen are tools, but not the process itself. 

Authentic intelligence

Market downturns are exactly when sales pitches for "protected products" like buffered notes or fixed-indexed annuities go into overdrive. What's an advisor to do: Cave to client fears and play the product game, or get back to the important things we can control like spending flexibility, tax planning and strategic rebalancing?

The real validation of process over product comes during market stress. Is it a one-time magic pill? No. When market volatility hit this spring, multiple clients called with concerns about their portfolios. I still had to remind them of the structure we had built and why.

Retirement income planning is about helping people make the most of the one life they get, using the money they've spent decades saving. In a world where artificial intelligence can generate plans and spreadsheets, the ability to apply knowledge with wisdom and judgment is what separates an advisor from a calculator. 

When the goal is maximizing well-being in retirement, your focus has to be on the process. Not just the dollars, but the decisions; not just the outcomes, but the tradeoffs; not just the plan, but how it adapts over time. 

Good retirement planning isn't built on a product. It's built on a process: one conversation, one decision and one relationship at a time.