If you’ve checked your 401(k) balance recently and felt a little nervous, you’re not alone. With recent market volatility, we’ve seen some big ups, big downs, and everything in between. And through it all, it reminds us: the stock market giveth, and the stock market taketh away.
So, when should we start reducing risk? When does it make sense to shift to less volatility in retirement?
Hi, I’m Devin Choules, founder and CEO of Choules Financial. And on this week’s Key to Yes, we’re talking about volatility in retirement—why it matters, how to evaluate your current risk exposure, and how to adjust your strategy to better align with your phase of life.
Let’s start with why reducing risk matters.
One of the biggest reasons is something called sequence of return risk. If you retired around 2010 or 2011, you likely enjoyed the longest-running bull market in history. Chances are, even while taking withdrawals, your account has grown.
But if you retired in 2007—right before the financial crisis—you saw the market drop 50% shortly after you stopped working. That could have severely impacted your ability to stay retired.
That’s sequence of return risk in action. During your accumulation years, when you’re still working and contributing to your accounts, short-term market swings don’t matter much. But once you draw that line in the sand and retire, the order of returns matters a lot. If your early retirement years are filled with market losses, it can dramatically shorten how long your money lasts.
That’s why it’s critical to have a written retirement income plan backed by a sound investment strategy—one that works regardless of what the market is doing.
Next, let’s talk about evaluating your current risk exposure.
Many people set up their 401(k) investments decades ago—maybe in their 30s or 40s—and haven’t revisited them since. But now, 10, 20, even 30 years later, your life is different. Your risk tolerance and risk capacity have likely changed. You’re not in the accumulation phase anymore; you’re in the distribution phase.
It’s time to reassess.
And here’s a common misconception: people often think their money is safer because it’s in a 401(k), or because it’s with a familiar provider like Fidelity or T. Rowe Price, or because they’ve worked at the same company for decades. But your retirement money isn’t “at” your company—it’s invested in underlying assets. What matters is where and how it’s allocated, not the name on the statement.
Just because it’s familiar doesn’t mean it’s safe. You need a balanced portfolio that’s designed to support income—not just growth.
In retirement, the goal shifts. It’s no longer about maximizing how fast you can grow your money. It’s about making sure your money lasts longer than you do. That means transitioning into investments like bonds, dividend-paying stocks, annuities, and REITs—vehicles that can help stretch your dollars and reduce volatility.
It’s about moving from growth-focused to preservation-focused.
Thanks for joining me—this has been Devin Choules on The Key to Yes. If you found this helpful, make sure to like, subscribe, and follow. We’ll see you next week.
