What’s the Smartest Investment Mix for Retirees Right Now?

Sep 16, 2025

Explore the evolving landscape of retirement investments beyond the traditional 60/40 model. Discover how sequence of return risk can jeopardize financial stability and learn about the innovative concept of 'Root Reserves' to mitigate early withdrawal impacts. Delve into the importance of growth investments to combat inflation and preserve purchasing power. Finally, understand the often-overlooked behavioral risks in investing, emphasizing emotional comfort with market fluctuations as crucial to retirement planning.

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INSIGHT

Three Core Retirement Risks

Retirement portfolios must guard against three core risks: volatility, inflation, and behavior.
A one-size-fits-all 60/40 portfolio ignores individual cashflow and emotional needs.

INSIGHT

Sequence Of Return Risk Matters Most

Sequence of return risk means the order of returns matters more than the average return in early retirement.
Early negative returns while withdrawing can create lasting headwinds that derail plans.

ADVICE

Keep Five Years Of Stable Reserves

Set aside five years of stable assets as a reserve to avoid selling stocks during downturns.
Use cash, CDs, or short-term bonds laddered to cover each year's withdrawals while markets recover.

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Navigating market volatility in retirement requires more than the traditional 60/40 portfolio. This episode explores three critical risks every retiree must address to maintain financial security through changing market conditions.

The first is sequence of return risk, which can devastate a portfolio if early withdrawals align with a downturn. Listen to James share his concept of "Root Reserves", setting aside five years of stable investments to provide protection during turbulent periods without selling at a loss.

The second is inflation risk. Even modest 3% inflation can nearly triple the cost of living over a typical retirement. This makes growth investments essential, even for conservative retirees, to preserve purchasing power across decades.

The third is behavioral risk. There is an emotional side of investing is often overlooked. Understanding personal comfort with volatility is just as important as the numbers. Different types of fixed income play different roles, from providing liquidity to acting as portfolio ballast during market stress.

By analyzing cash flow needs, time horizon, and risk tolerance, retirees can create a portfolio built to weather any financial storm.

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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

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