{"id":538627,"date":"2026-03-15T20:07:09","date_gmt":"2026-03-15T20:07:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/538627\/"},"modified":"2026-03-15T20:07:09","modified_gmt":"2026-03-15T20:07:09","slug":"how-retirees-can-defend-against-sequence-risk","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/538627\/","title":{"rendered":"How Retirees Can Defend Against Sequence Risk"},"content":{"rendered":"

On this episode of The Long View<\/a>, retirement specialists Jamie Hopkins<\/a> and Bonnie Treichel<\/a>, who are co-authors of the new book Your Retirement Sketchbook<\/a>, discuss how their work at the FinServ<\/a> foundation aims to close the gap in the next generation financial advisors, behavioral biases retirees face when transitioning from saving to spending, and how people approaching retirement can build their \u2018layered cake\u2019 of retirement resources that mitigates risk.<\/p>\n<\/p>\n

Here are a few excerpts from Hopkins and Treichel\u2019s conversation<\/a> with Morningstar\u2019s Christine Benz<\/a> and Amy Arnott<\/a>.<\/p>\n

Withdrawal Strategies for Managing Sequence of Returns Risk in Early Retirement<\/p>\n

Christine Benz: I\u2019d like to ask about sequence of returns risk, which managing is central to sustainable withdrawals. Can you talk about what frameworks you find most effective for managing it within, say, the first five or 10 years of retirement?<\/p>\n

Jamie Hopkins: I think the sequence of returns risk is one of the two biggest challenges really in the retirement income, I guess you would say, equation. If you\u2019re trying to just look at this from a math perspective, we have this uncertain first couple of years, potentially, of volatility from the portfolio. The second one is really like, how long are we going to be alive, which we can\u2019t really answer. So, it\u2019s really hard to manage that one. And the markets are going to do what they\u2019re going to do. One of the answers is, we can\u2019t change the investment returns of anything during the first five years, like how bonds are going to perform, how CDs are going to do, how cash is going to do, how real estate is going to do, how the markets are going to do. They are going to move the way they move when we retire in that first five to 10 years. Over time, we might have a better guess of how these are going to perform.<\/p>\n

How do we deal with this? I think one of the main things is reducing the risk of having huge losses in our portfolio early on, where we have to take withdrawals from it. That\u2019s the whole idea of sequence of returns risk. So I do think starting off retirement, and I\u2019m a fan of this, is starting off retirement in a more conservative investment framework for the maybe two to three years heading into retirement, and those first maybe three to five. And then, actually allowing our portfolios, we spend down CDs, cash, and bonds as a percentage to get more aggressive. Now, I\u2019m not telling people to go buy more and more equities, but to essentially deplete some of our fixed-income sources earlier on, I think, is really helpful. That\u2019s one framework.<\/p>\n

I think two other frameworks is look at our total asset pool. I have talked about tapping home equity during those potential down years early in retirement. So, whether it\u2019s a reverse mortgage, and you\u2019re drawing on that line of credit, using a heloc is also a very powerful tool. Maybe you need to redo the roof, and that can be a good way to manage that big expense in the first couple of years of retirement without having to spend down our portfolio, especially if we\u2019re seeing a drawdown in the assets we\u2019re in.<\/p>\n

Another one is actually just, it\u2019s fairly straightforward, and is being diversified in our investments. I mean, that\u2019s not super complicated, but I still see retirees sometimes retiring with really high concentrations in just a couple of stocks because they were growth vehicles, and they allowed them to accumulate wealth, but that might not be the right vehicle to get through retirement. Wealth generation strategies and wealth preservation strategies are what we\u2019re talking about now, are different things. So a more diversified portfolio, both among equities and across different asset classes, is really important because it gives us flexibility on being able to sell things at different time periods based on how they\u2019re performing.<\/p>\n

How Retirees Can Plan for a Smaller Piece of Social Security in Their Retirement Income Cake<\/p>\n

Amy Arnott: One layer of the cake that you mentioned is Social Security, and for many people, it\u2019s really the biggest layer of the cake. But we\u2019ve talked to a lot of people who are really, really worried about potential funding challenges for Social Security. Is that something people should be worried about, or do you think a scenario of potential benefit reductions in the future is not likely?<\/p>\n

Bonnie Treichel: Well, I think there\u2019s a real issue that Social Security is facing a funding gap. I think depending on what literature you read or what you listen to, there are some that take a very drastic approach that Social Security is going away, and you\u2019ll never have it again. I believe there will be continued evolutions and that Social Security will not go away. But I do think it\u2019s really, and we talk about this with the sketchbook approach, right, it\u2019s currently facing a funding gap, and the reality is that it may have an impact on future retirees and how they structure their income.<\/p>\n

When we think about the sketchbook approach, what does that mean? It means thinking about how to draw the lines, erase a little, reshade a little, and be thoughtful about other approaches to take in thinking through, OK, what else do we need to build the cake? So if we go back, I keep going back to the cake, but if we think about how to add those layers so that, if that slice of the cake isn\u2019t as thick, we can supplement that with other things. If it\u2019s more in the 401(k), more in a different brokerage account, but being thoughtful about: We\u2019ve still got to build the same cake, so how do we just supplement with other things with the potential of not having as much coming from Social Security in the future?<\/p>\n

More from The Long View on retirement and financial advice. <\/p>\n","protected":false},"excerpt":{"rendered":"On this episode of The Long View, retirement specialists Jamie Hopkins and Bonnie Treichel, who are co-authors of…\n","protected":false},"author":2,"featured_media":538628,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":["post-538627","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/538627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=538627"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/538627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/538628"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=538627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=538627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=538627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}