If you haven’t built in what I call prudent flexibility - the ability to pivot without panic - you’ve left yourself exposed. Years of steady gains can lull you into believing the market’s rhythm will keep playing the same tune forever. That comfort can be the most dangerous feeling in finance, because it convinces you to stand still when you should be adjusting course.

By the time the storm shows up, it’s too late to prepare. And when it hits, the wake-up call feels like a punch to the gut.

At Retirement Red Flags, we see this mindset all the time: people conditioned to think “10% every year” is not just normal, but expected to continue. It’s not. And in retirement, that assumption can be one of the most dangerous financial traps you’ll ever step into.

When Time Stops Being Your Asset

During your working years, market downturns were frustrating, but they weren’t fatal. You had two powerful tools on your side:

Income from work – allowing you to ride out the storm without tapping your investments.

Time – enough years ahead to wait for the recovery and benefit from the eventual rebound.

Once you’re retired, both of those tools disappear.

If your portfolio takes a 30% hit in retirement, you can’t “just work a few more years” to make it back. And if the recovery takes five, six, or seven years (which is completely normal in market history), that’s not just an inconvenience, that could be a major chunk of your remaining retirement.

In retirement, time is no longer an asset, it is a liability.

The Illusion of Stability

A steady 10% return looks like a calm ocean… until the storm arrives. And storms in the market rarely give advance warning.

It’s like being on a flight where the ‘seatbelt sign’ turns off. You get comfortable, maybe even forget where the buckle is, because the ride has been so smooth. Then out of nowhere, turbulence hits, and you’re instantly reminded why the belt was there in the first place.

This is why, for decades, financial advisors have recommended gradually shifting from growth-heavy stock portfolios toward more stable fixed-income investments as you approach and enter retirement. Not because they want you to miss out on those headline 10% years, but because they know:

✔ Markets are cyclical.

✔ The rebound after a drop can take years.

✔ Retirees can’t afford to recover on the same timeline as younger investors.

A Simple Example

Imagine you have $1,000,000 invested and you’re drawing $50,000 a year to live on.

If your investments drop 30% in a downturn, you’re now down to $700,000. But you still need that $50,000 to live on, which now represents a much larger percentage of your reduced portfolio.

Even if the market returns to previous levels over the next five years, the money you withdrew during that time is gone forever, meaning your account may never fully recover.

This is why retirees are often urged to park part of their portfolio in fixed-rate income assets. These assets don’t swing wildly with the stock market and can provide a dependable cash flow, a financial lifeboat when market waters get choppy.

The Mindset Shift

‘Saving for retirement’ is a different mindset than ‘living in retirement.’

Living in retirement isn’t about squeezing every last drop of return out of the market. It’s about proactive, prudent flexibility, making adjustments before you’re forced to.

In your working years, you could think like a marathon runner, pacing yourself for a long race, knowing you could make up lost time. In retirement, you’re more like a pilot on final approach. You don’t get a second chance to land the plane smoothly, so you keep one eye on the weather and adjust your course well in advance.

Why “This Will Last Forever” Is Dangerous Thinking

When you’ve had several years of strong returns, it’s human nature to believe it will keep going. This is called recency bias, the tendency to project the recent past into the future. But history shows us that even long bull markets end.

In the early 2000s, many investors rode the dot-com bubble up, only to watch their portfolios get cut in half almost overnight. The same thing happened in 2008, but for retirees already living on a fixed nest egg, it wasn’t just numbers on a page.

It was opening your monthly statement and seeing hundreds of thousands of dollars gone… with no idea when, or if, it would come back. It was watching the news each night, hearing words like “collapse” and “crisis,” while wondering if you’d need to sell your home, cancel travel plans, or go back to work. It was that sinking feeling in your stomach every time the phone rang, worried it might be your advisor with more bad news.

Looking back now, the memory of those crashes has faded for many. The rebound came, portfolios recovered, and life moved on. But in the moment, it was chaos. And if you had been at the same point in life then as you are now - retired, drawing from your portfolio, relying on it to last, you would have been making decisions in a state of panic, not strategy.

Those who shifted some of their gains into safer assets beforehand (when times were good) weathered the storm with far less fear and far fewer regrets. Those who didn’t were forced into hard choices they never thought they’d have to make.

The Bottom Line

Retirement isn’t about avoiding growth entirely, it’s about making sure that a sudden market swing doesn’t permanently damage your ability to live comfortably. That’s why balancing growth assets with fixed-rate income investments is a time-tested strategy.

And here’s the thing: the “average 10% return” you hear about isn’t always what you actually get in your account. In an upcoming article, I’ll break down the difference between arithmetic returns and geometric returns, and why understanding it could change how you view risk forever.

Until then, remember this:

Once you’re retired, time is no longer an asset, it is a liability... and your portfolio should reflect that.

That’s why it’s so important to know what could be quietly working against you.

Our complimentary Red Flag Review Call is designed to uncover your blind spots before they become problems. In less than an hour, we’ll walk through your current plan together, point out any areas of concern, and give you practical next steps you can act on right away.

You can reserve your complimentary call here: Book My Red Flag Review

*This call is for educational purposes only and is not a financial advising call.

*Because common sense isn't always 'common', here is the legal disclosure: This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Retirement Red Flags does not guarantee the accuracy or completeness of the information provided. All investments involve risk, including potential loss of principal. Readers should conduct their own research and consult with a professional advisor before making any financial decisions. I am not an attorney, CPA, or financial advisor.