Retirement isn’t just about enjoying the good years. It’s also about being ready for the unpredictable ones, the years when markets drop, inflation spikes, or the headlines feel a little too familiar. The truth is, downturns are inevitable.
But here’s the thing, with the right backup plan, you can weather those market storms and still sleep well at night. Whether you’re living in Phoenix, near the golf courses of Scottsdale, or enjoying your home in Tucson, Chandler, or Paradise Valley, if you’re over 50 with more than $2 million saved, this question probably crosses your mind: “What if the market falls right after I retire?”
So let’s talk about how to protect your retirement income with strategies that keep you confident, no matter what Wall Street does next.
Step 1: Build a Cash and Cash Equivalent Buffer
Start by keeping 1 to 3 years of your living expenses in cash, short-term bonds, or CDs. This is your breathing room when markets drop. It lets you avoid selling your investments at the wrong time. Think of it as your “sleep-well-at-night” fund. If your lifestyle costs $120,000 a year, set aside $120,000 to $360,000 in safe money. I often hear clients in Phoenix or Scottsdale say, “But Raman, I hate keeping that much cash, it’s just sitting there.” But here’s the thing, that money’s job isn’t to grow, it’s to protect. It’s what helps you stay calm while everyone else is panicking.
Step 2: Use Guardrails for Spending
When the market dips, you don’t need to panic, you just need to pivot a little. Cut back on discretionary spending like travel, upgrades, or big purchases by 10 to 20%. Keep essentials like housing, healthcare, and food covered by reliable income sources such as pensions or Social Security. Once markets recover, you simply ease back to your usual spending.
This flexibility can add years to your portfolio’s longevity. For example, if you live in Tucson and had plans for a luxury vacation, delaying it for one season could make a huge difference in keeping your plan on track. If you’ve read my article 5 Reasons You Should Consider Firing Your Advisor, you already know that a great advisor doesn’t just talk about investments. They help you build real spending guardrails that keep you protected in years like these.
Step 3: Adjust Your Withdrawal Strategy
Your withdrawal plan shouldn’t be rigid. It should move with you. That’s where the bucket approach comes in, keeping short-term money in cash and bonds, and long-term money in equities. You draw from safe assets when stocks are down and refill those buckets when markets recover.
Another smart move is to consider Roth conversions in down years. When account values drop, you pay less tax on the conversion and create future tax-free income.
And if you had planned a large withdrawal like a new car or home project, consider pausing that until your portfolio rebounds. In Chandler, I’ve seen retirees protect their wealth this way. A flexible withdrawal plan gives you control instead of reacting emotionally when the market dips.
For more on the hidden costs of rigidity, see my piece Am I Paying Too Much in Advisor and Investment Fees? which explains how unnecessary fees and inflexible planning often hurt investors the most when volatility hits.
Step 4: Tap Other Income Sources, If Available
If markets stumble, you can always look beyond your portfolio for support. Some of my clients in Paradise Valley and Scottsdale do part-time consulting or project work, not because they have to, but because it keeps them sharp and reduces stress on their portfolio.
Some retirees use home equity through downsizing or a well-planned reverse mortgage. And if you own a rental property, that steady income can be your safety net when markets cool off. The point isn’t to replace your portfolio. It’s simply to give yourself options when times get rough.
Step 5: Review Insurance and Risk Management
If markets are down while costs are up, the right insurance coverage can save the day. Long-term care or hybrid policies can help protect against major healthcare surprises. A small fixed annuity might offer stable income if the market stays sluggish. And umbrella insurance can protect your assets from unexpected liability claims.
In Phoenix and surrounding cities, healthcare costs keep rising each year. Reviewing your coverage and protection plan may not sound exciting, but it’s what keeps your financial foundation stable when everything else feels shaky.
Step 6: Use Taxes as a Safety Net
Taxes don’t just happen to you, they can be planned for. In down years, use tax-loss harvesting to offset future gains. If your income is lower because you’re drawing less from investments, it might be a perfect time to make a Roth conversion at a lower bracket.
You can also stay mindful of IRMAA thresholds to avoid unnecessary Medicare surcharges.
For a deeper dive, check out my articles Taxes in Retirement: Which Benefits Are Taxable and Which Aren’t and Avoid These 5 Retirement Tax Traps in 2026 Before They Drain Your Nest Egg which explain how retirees can use smart timing to avoid letting taxes quietly eat away at their income.
Now, let’s talk about something most people overlook
How your advisor gets paid.
When markets fall, many percentage-based advisors still make the same pitch: “Let’s buy this product to protect you.” But as a flat-fee fiduciary, my job isn’t to sell products. It’s to help you plan smarter. At Singh PWM, each retirement plan is stress-tested against recessions, inflation, and long bear markets. Cash-flow guardrails are built, tax strategies are coordinated, and every step is designed to prepare you for both good and challenging years, all for one transparent flat fee.
If you’ve read Arizona Retirement Math: What a $2 Million Nest Egg Actually Gets You in Chandler, Paradise Valley, and Beyond, you already know that in Arizona, cost of living, taxes, and healthcare vary drastically by region. That’s why personalized planning matters more than ever.
Downturns are going to happen. But with the right combination of cash reserves, flexible spending, smart tax planning, and a real strategy behind your investments, you’ll be ready. If you’re in Phoenix, Scottsdale, Tucson, or Chandler and want to know how your retirement plan would perform in a real downturn, schedule your free Retirement Stress-Test today. Let’s make sure your future stays on track, no matter what the market decides to do next.
Raman Singh, CFP®
Relatable Articles
- 5 Reasons You Should Consider Firing Your Advisor
- Am I Paying Too Much in Advisor and Investment Fees?
- Taxes in Retirement: Which Benefits Are Taxable and Which Aren’t
- Avoid These 5 Retirement Tax Traps in 2026 Before They Drain Your Nest Egg
- Arizona Retirement Math: What a $2 Million Nest Egg Actually Gets You in Chandler, Paradise Valley, and Beyond
Important Disclosures
The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.
This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.
Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted.
Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute
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