Hi Jan,

Retirement planning often focuses on averages - average returns, average spending, average life expectancy. But the real world rarely behaves in averages. That is why this week, we are focusing on a topic that is critical during market downturns: how to build a financial safety net using buffer assets.

Buffer assets are resources you can rely on when markets are down, so you do not have to sell investments at a loss. They are not about chasing returns. They are about buying time. And in the early years of retirement, that time can be one of your most valuable assets.

In this week’s article, we explore several types of buffer assets, including cash reserves, reverse mortgages, annuities, and CD ladders. We also look at how they can help protect your retirement income. We are including a related piece from McLean that outlines broader strategies for managing sequence of returns risk and where buffer assets might fit into the bigger picture.

If you have been wondering how to create more stability in your plan without sacrificing long-term growth, this week’s content is a great place to start.

Building a Safety Net for Retirement Income with Buffer Assets

One of the most significant risks retirees face is the sequence of returns risk, which is the danger that poor investment returns early in retirement will have a disproportionate impact on long-term financial security. This is because you are selling holdings at a loss to create income, reducing the value of your assets for future distributions (and potentially shortening how long your portfolio will last before depletion).

By Retirement Researcher

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4 Ways to Manage Sequence of Returns Risk in Retirement

Sequence of returns risk, or sequence risk for short, is the risk that you will need to take distributions from your investment portfolio when the market has recently declined. Taking distributions when the market has gone down effectively “costs” more than at other points in time because you are forced to sell your investments at a lower price.

By McLean Asset Management

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Episode 191

From Cash to HELOCs What's In Your Buffer Toolbox

Wade and Alex dig into your follow-up questions from the sequence risk webinar clarifying which tools really work as buffer assets, and why some common options fall short when you need them most.

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From Cash to HELOCs What's In Your Buffer ToolboxWade and Alex dig into your follow-up questions from the sequence risk webinar clarifying which tools really work as buffer assets, and why some common options fall short when you need them most.

From Cash to HELOCs What's In Your Buffer Toolbox

Wade and Alex dig into your follow-up questions from the sequence risk webinar clarifying which tools really work as buffer assets, and why some common options fall short when you need them most.