Planning and diversification, not emotional reactions, should drive retirement

Everyone's retirement plan is different, based on the person's needs and wants.

This article is Sponsored by Bright Wealth Management

BY BRIGHT WEALTH MANAGEMENT

Nov 13, 2026, 1:39 AM

(Adobe Stock Photo)

It’s natural to worry about retirement savings, but careful planning and diversifying your retirement funds create a process rather than relying on emotional reactions.

One of the most common fears of those approaching retirement is losing money during times of market volatility. But retirement planning is about limiting risk rather than eliminating it, because the risk will always be there.

“The problem is that moving anything to cash is going to eliminate just one type of risk while you’re going to increase other types,” Matt Dages, founder and CEO of Bright Wealth Management, said on the company’s show. “The best days of the market happen on the heels of the worst days. … It’s extremely hard (to predict the upturn) and likely what happens is people that move to cash or panic when the market downturns, then they miss the market when it goes back up because they cannot time it.”

Everyone’s retirement plan is different, based on the person’s needs and wants.

That’s why having a plan with goals in mind and creating strategic asset allocation that aligns your portfolio with that plan — rather than falling into emotional reactions — drives successful retirement.

How to diversify your portfolio through strategic asset allocation

There’s often a misconception with saving for retirement. It’s not about maximizing your returns but managing risk while maintaining growth potential.

The two go hand in hand, but focusing too closely on maximizing returns can alter risk management.

The key to diversification is having a mixture of investments that all respond differently to market conditions, according to Dages. These investments include:

Cash reserves
Fixed income securities
Domestic and international equities
Alternative investments
Inflation-sensitive assets

“We want to look at building a full retirement plan that encompasses all of your investments, where you’re at in your life,” Dages said. “What’s your risk? What’s the income that you actually need? How can we build a strategy that’s going to give you long-term consistent growth?”

How to avoid sequence of return risks

Sequence of returns risks can affect retirement savings in a major way because it’s the timing of market gains and losses in relation to retirement withdrawals.

Once retirees begin withdrawing from their portfolios, they lose the ability to contribute. If a portfolio isn’t very diversified, a downturn in the market could become very costly.

“If you were to be experiencing a market downturn within the first few years of retirement, and I’m talking like a pretty substantial 25, 30% correction, that downturn, which if you lost 30%, could completely throw off your retirement for the rest of your life,” Dages said. “Because now … you’re taking money out of your account for living expenses, and you have compound loss.

“So you’ve actually lost more than 30% over that time period. And it’s gonna take more than 30% just to get you back to even. That could take years. And for many people, maybe it’s actually not recoverable.”

Though retirees can’t predict a market downturn, they can prepare for when one hits by having assets allocated elsewhere through a structured portfolio and income plans that account for the uncertainty.

What are other important expenses to plan for during retirement?

Healthcare is one of the biggest expenses for retirees, and being aware of the extra costs that come with it can make a big difference.

Many people think it’s simple: Medicare. But in reality, there are many decisions and planning that go into a retiree’s Medicare plan to make sure it suits them best.

Plans can change year-to-year based on a number of variables, which is why it’s essential to have annual reviews of coverage.

“They assume that because their Medicare plan worked well this year, that it’s going to work exactly the same next year,” Dages said. “They may not know of the changes (every year) … Medicare Advantage, prescription drug plans, they can change premiums, deductibles, provider networks.

“Then some plans … may discontinue coverage in general. So even if you’re really perfectly happy with your current coverage, we need to review your annual notice of change.”

Other costs associated with healthcare include tax planning and income-related monthly adjustment amounts, which use a two-year look-back period and can affect premiums years in the future.

Nobody wants to face unnecessary Medicare surcharges, so some effective strategies to avoid them include:

Roth conversions
Health Savings Account utilization
Thoughtful withdrawal sequencing
Proactive distribution planning

Making sure you meet with a professional each year to review your healthcare plan helps you make more informed decisions and drive confidence in your retirement plan.

The importance of enjoying retirement

What’s the point of spending time, energy and money saving up for retirement if you don’t use the money effectively once you reach that goal?

It can be a struggle for retirees to transition from the working world to retirement. Having goals set for retirement and a path to achieve those goals makes the transition much smoother. Those goals can include:

Travel
Volunteer work
Family involvement
Charitable giving
Hobbies
Part-time employment
Personal development

The first step is to have a plan, but following through on it is just as important. That’s where withdrawal rates enter the picture, according to Dages.

“I’m going to be able to show you what that safe withdrawal rate is, how much you can spend and we look at it like guardrails. Here’s the realistic amount that you can be spending every year. It doesn’t mean you have to, which is the exciting part,” Dages said. “It’s like, yeah, you could. But as long as we’re in this range, then you’re comfortable, right?”

The Bright Wealth Management Show with Matt Dages airs Saturdays from 1 p.m. to 2 p.m. and Sundays from 3 p.m. to 4 p.m. on KTAR News 92.3 FM.