A Better Way Financial
Empower Your Retirement
By Frankie Guida, CFP®
Most people spend 30 to 40 years investing for retirement. Then retirement arrives, and suddenly everything changes. You go from investing for retirement to investing in retirement. The problem: no on teaches you how to invest in retirement. What makes this a problem is that often the strategies that worked so well during your working years can actually put your retirement at risk if you don’t adapt your approach.
That’s a shift most people aren’t prepared for. And it’s one of the most important conversations we have with clients at A Better Way Financial every single day.
In your working years, you’re a long-term investor by default. If the market drops 30% or even 50%, you stay the course. History shows that every single market crash has been followed by a full recovery — and then new all-time highs. When you don’t need the money for 20 or 30 years, time is your greatest asset.
But retirement changes the equation entirely.
Once you start drawing income from your portfolio, you can no longer afford to simply wait out a downturn. Here’s why: if the market drops and you’re forced to sell investments to cover your living expenses, that money never participates in the recovery. It’s gone. And the smaller your remaining portfolio, the less it earns when the market comes back. This compounding damage is what financial planners call sequence of returns risk — and it can be one of the biggest threats to a comfortable, lasting retirement.
Sequence of returns risk is the danger of experiencing significant market losses early in retirement, right when you’ve started pulling income from your savings. Unlike a market loss during your working years — which you can simply ride out — a loss in the first years of retirement can permanently reduce the longevity of your portfolio.
Consider this example: You’ve saved $1 million in your 401(k). Then 2008 happens, the market drops 50%, and your balance falls to $500,000 — right as you planned to retire. Now you’re drawing income from half the amount you saved. That’s not just a temporary setback. That’s a fundamentally different retirement than the one you planned for.
This is why your investment strategy must evolve as you approach and enter retirement. Not because the stock market is bad — it isn’t — but because the timing of losses matters in a way it simply didn’t when you were still saving.
At A Better Way Financial, we address this by designing what we call a two-sided retirement portfolio: one side carries market risk for long-term growth, and the other side holds safe money that generates income without exposure to stock market volatility.
The market side of the portfolio is designed to mirror or closely track the performance of the overall stock market. During strong market years, this portion grows meaningfully — giving your retirement the upside it needs to last 20, 30, or even 40 years.
The safe money side — which we typically structure using fixed index annuities rather than low-yield CDs or savings accounts — generates a competitive rate of return without any exposure to market losses. Yes, you’ll likely earn slightly less than the market on this portion (roughly 1–2% less over time). But the tradeoff is significant: this money is there for you when the market is not.
When the market drops, you draw income from the safe side. Your market investments are left alone to recover. When the market rebounds, you draw from the growth side. This strategy protects your portfolio from the compounding damage of sequence of returns risk — without requiring you to abandon the growth potential of the stock market entirely.
In your working years, you’re a long-term investor by default. If the market drops 30% or even 50%, you stay the course. History shows that every single market crash has been followed by a full recovery — and then new all-time highs. When you don’t need the money for 20 or 30 years, time is your greatest asset.
But retirement changes the equation entirely.
Once you start drawing income from your portfolio, you can no longer afford to simply wait out a downturn. Here’s why: if the market drops and you’re forced to sell investments to cover your living expenses, that money never participates in the recovery. It’s gone. And the smaller your remaining portfolio, the less it earns when the market comes back. This compounding damage is what financial planners call sequence of returns risk — and it’s one of the biggest threats to a comfortable, lasting retirement.
Sequence of returns risk is the danger of experiencing significant market losses early in retirement, right when you’ve started pulling income from your savings. Unlike a market loss during your working years — which you can simply ride out — a loss in the first years of retirement can permanently reduce the longevity of your portfolio.
Consider this example: You’ve saved $1 million in your 401(k). Then 2008 happens, the market drops 50%, and your balance falls to $500,000 — right as you planned to retire. Now you’re drawing income from half the amount you saved. That’s not just a temporary setback. That’s a fundamentally different retirement than the one you planned for.
This is why your investment strategy must evolve as you approach and enter retirement. Not because the stock market is bad — it isn’t — but because the timing of losses matters in a way it simply didn’t when you were still saving.
At A Better Way Financial, we address this by designing what we call a two-sided retirement portfolio. One side carries market risk for long-term growth, and the other side holds safe money that generates income without exposure to stock market volatility.
The market side of the portfolio is designed to mirror or closely track the performance of the overall stock market. During strong market years, this portion grows meaningfully — giving your retirement the upside it needs to last 20, 30, or even 40 years.
The safe money side — which we typically structure using fixed index annuities rather than low-yield CDs or savings accounts — generates a competitive rate of return without any exposure to market losses. Yes, you’ll likely earn slightly less than the market on this portion (roughly 1–2% less over time). But the trade-off is significant: this money is there for you when the market is not.
When the market drops, you draw income from the safe side. When the market rebounds, you draw from the growth side. This strategy protects your portfolio from the compounding damage of sequence of returns risk without requiring you to abandon the growth potential of the stock market entirely.
There’s no single right answer — and anyone who tells you otherwise isn’t giving you personalized advice. The right balance between market and safe money depends entirely on your personal risk tolerance, income needs, timeline, and goals.
That’s exactly why we begin every client relationship with a Discovery Meeting. We take the time to truly understand goals. From there, we build a custom retirement roadmap — not a template pulled off a shelf.
Recently, a couple came to us through a referral. They had done everything right during their working years — saving diligently and accumulating $1.6 million for retirement. Their goal was straightforward: generate $80,000 per year in income.
When we reviewed their existing portfolio, we found two things. First, their projected rate of return was a respectable 6.5% — but the level of risk in their portfolio was higher than they were comfortable carrying. Their portfolio could drop as much as 32% in a market downturn, while their personal tolerance was closer to 25–27%.
Second, their tax picture had significant untapped opportunity.
By restructuring their investment allocation — reducing market risk while optimizing the safe money side with fixed index annuities — we were able to both reduce their risk to a comfortable level and increase their projected rate of return to 7.7% over the same 25-year period. That difference of roughly 1.2% translates to approximately $21,000 more in interest income per year.
Then we looked at their tax strategy. By implementing proactive, year-round tax planning, we identified over $275,000 in potential tax savings across their retirement years.
The combined result? Instead of $80,000 per year in retirement income, we were able to show them a path to $160,000 per year — doubling their income without them saving a single additional dollar. They had already done the hard work. We simply helped them optimize what they had built.
Most people who walk into our office don’t know exactly how much risk they’re carrying. They often have a sense that something could be better — they just don’t know what, or how.
Maybe it’s not as dramatic as doubling your income. Maybe it’s an extra $10,000 or $20,000 per year that you didn’t realize was available. But imagine adding $20,000 in annual income — simply by making smarter choices with money you’ve already saved. That’s the kind of difference a retirement-focused financial plan can make. The best part: you don’t have to figure this out alone. That’s what we’re here for — every single
Sequence of returns risk is the danger of experiencing large market losses early in retirement, when you’re already drawing income from your portfolio. Unlike losses during your working years, early retirement losses permanently reduce your portfolio’s ability to recover — because the money you withdraw to cover living expenses is no longer invested to benefit from the market’s rebound.
There is no universal answer — it depends on your income needs, timeline, and personal comfort with market volatility. A personalized retirement analysis with a fiduciary financial planner is the best way to determine the right allocation. Some retirees are comfortable with 60–70% in market investments; others prefer closer to 50/50.
Fixed index annuities (FIAs) are insurance products that credit interest based on the performance of a market index (like the S&P 500) without directly participating in market losses. They offer a competitive alternative to CDs and bonds for the safe money portion of a retirement portfolio, typically earning 1–2% less than the market over time — but with zero downside risk.
A fiduciary financial planner is one that is legally required to act in your best interest at all times — not just recommend products that are ‘suitable.’ This is a critical distinction from brokers, who are only held to a suitability standard. At A Better Way Financial, we are independent fiduciaries, which means our recommendations are always made with your goals — not commission incentives — as the top priority.
A Better Way Financial is a fiduciary retirement planning firm based in Bethlehem, PA, serving the Lehigh Valley and surrounding areas. We specialize exclusively in retirement planning — including retirement income, investment management, tax strategy, and estate planning. You can schedule a complimentary 15-minute discovery call at abetterwayfinancial.com.
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