When the market drops (or seems to bounce all over the place depending on the newest headline) it can get uncomfortable. For those of us still saving, the drops are a great opportunity to invest more. But if you’re retired or just about to retire and you’re planning on taking money from your portfolio to live on, a market slump isn’t just a source of discomfort. It can get really scary.

There’s a risk called “Sequence of Returns” risk that can really mess up a retirees plan if it isn’t managed well. This risk is the danger that a market drop happens early in retirement and means you’re selling investments at a loss to cover your expenses. If this happens right away in retirement, it’s a really bad start and can mean a damaged retirement plan that can’t quite recover even when the market does.

Don’t panic. Your plan can handle this. There are plenty of ways to weather the storm and one that I really like is the Guyton-Klinger guardrails model.

The Retiree’s Challenge

Retirement isn’t like saving for retirement. Instead of saving up you’re drawing money out of your accounts. It’s the whole reason you saved all those years!

A bear market hitting early can drain your portfolio faster than you’d think, locking in losses when you sell low to cover bills.

History backs this up: The Great Recession (2007-2009) slashed the S&P 500 by over 50%. Retirees withdrawing back then faced a brutal sequence.

Compare that to the 2020 dip (which was really short and sharp) or the slowish 20% drop of 2022.

Timing matters, but no one knows when the next bad market is going to begin or end. You don’t have insider information. You’re not in congress.

You can’t time the market, so build a plan that outlasts the bad times.

Guardrails for Tough Times

Enter the Guyton-Klinger guardrails model—a practical way to manage withdrawals and tame sequence of returns risk. I like to think of it like bumpers on a bowling lane: it keeps you on track without overcomplicating things.

Here’s how it works for retirees:

• Start with a Safe Rate: Say your portfolio’s $1 million. A 4% initial withdrawal gives you $40,000 in year one, adjusted for inflation after. That’s the baseline.
• Set Guardrails: Monitor your withdrawal rate annually. If markets tank and your portfolio drops (say, to $800,000), that $40,000 is now 5%. Guyton-Klinger sets limits—e.g., cut spending if the rate hits 5.8% (upper guardrail) or boost it if it falls below 3.2% (lower guardrail).
• Stay Flexible: In a downturn, trim withdrawals—skip the extra vacation, dial back to beans and rice for a bit. When markets recover, you can loosen up. It’s not rigid; it adapts.
• Protect the Core: The model prioritizes capital preservation in bad years, so you’re not selling stocks at rock bottom. Pair it with a cash buffer (1-2 years of expenses) for extra cushion.

This isn’t about timing the market—it’s about riding it out. Studies show guardrails can stretch a portfolio’s lifespan by years, even through a 2008-style crash. It’s disciplined, not desperate or reactionary.

Stick to the Plan

Your portfolio was built for this. Diversification (stocks, bonds, maybe some real estate or commodities) spreads the risk. Don’t panic-sell when headlines are scary, instead revisit your strategy with your planner.

History says that bear markets do end. Since WWII, recessions average 11 months. A 10% correction (a drop from the high) happens about every year and a half. The S&P 500 tripled after 2009’s mess and has come back from every 10% drop with a new all-time high every time. Patience pays.

A Bigger Perspective

If you’re worried about this then you should definitely get a plan. Wisdom demands that much.

But if you have a good plan and you’re still worried, then maybe you ought to look a little deeper. Markets wobble, but Christ doesn’t.

Put a real perspective on your worry and trust Christ.

25“Therefore I tell you, do not be anxious about your life, what you will eat or what you will drink, nor about your body, what you will put on. Is not life more than food, and the body more than clothing? 26Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27And which of you by being anxious can add a single hour to his span of life?^g 28And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin, 29yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? 31Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. 33But seek first the kingdom of God and his righteousness, and all these things will be added to you.

34“Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.

https://biblehub.com/esv/matthew/6.htm

For You, Right Now

If you’re retired or close to it, don’t let a bear market or volatility derail you. Use guardrails to keep withdrawals in check. Lean on cash reserves. Talk to your advisor. You’ve weathered storms before. This one’s no different.

Hang tight; spring’s coming.