MW Retirees, steel yourselves: Global crises might rattle the markets, but they don't have to ruin your retirement
By Jessica Hall
The economic shock from the Iran conflict can take on outsize importance for those close to or in retirement
Investors should rely on a "bucketing" strategy as they get closer to retirement.
The Iran conflict has shaken global markets, from oil and stocks to food and energy. While the overall stock-market fallout has been somewhat measured, it still takes on outsize importance for those close to or in retirement.
There's a 10-year window when people need to be especially careful about their investments and strategies, to assure their full retirement goes smoothly and their money lasts through decades of retirement. This "fragile decade" of preretirement years leading up to retirement and the first five years after you stop working are critical to get right.
Blame sequence-of-returns risk, which essentially means that when you're taking withdrawals from a portfolio, the order - or the sequence - of investment returns can affect your portfolio's overall value. Basically, account withdrawals during a bear market are more damaging than the same withdrawals in a bull market, because you're selling when stock values are down.
"People watch the headlines too much - the sensationalizing of it all. I bet people think the market's down much more than 5%," said Steve Azoury, owner of Azoury Financial in Troy, Mich.
Read: Retiring in a bear market can be catastrophic - working one more year can make a huge difference
While we're not even close to a bear market - defined as a decline of 20% or more - investors and consumers still have felt some pain recently. Oil prices (CL00) (BRN00) have jumped, and gas prices are up about $1 a gallon in the past month. And while the S&P 500 SPX has fallen about 3.7% since Feb. 28 - when the U.S. and Israel launched airstrikes on Iran, killing Iranian Supreme Leader Ali Khamenei - the index is still up 15% over the past 12 months.
"A 5% pullback should not affect an average retiree. Before the conflict, you should have already been well diversified and had your short-term spending needs in less risky assets," said Brian Schmehil, managing director of wealth management for the Mather Group. "Five-percent drops are extremely common and should not derail any of your long-term goals. Even if you need to sell some investments now as you approach retirement, the recent volatility shouldn't have a major impact on your financial goals."
Schmehil said the market could have a negative impact on preretirees who have lump-sum pension payout or a one-time, upfront cash payment representing the total value of their future monthly pension benefits. He explained that the Iran conflict has led to an expectation of higher, sustained inflation, which has pushed bond yields up further than before the conflict began.
"These higher yields could have a negative impact on someone's plan to retire, since higher interest rates lead to a lower pension lump-sum value," Schmehil said.
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"I think the emotional component is more abrasive than the market component," said Bill Shafransky, a financial adviser with Moneco Advisors in New Canaan, Conn. "While I certainly don't want to downplay the severity of the Iran situation, we haven't seen a significant market nosedive like we saw last year following the tariff announcements. But this event is triggering panic because of what 'could' happen to portfolios."
Ideally, investors should rely on a "bucketing" strategy as they get closer to retirement, Shafransky said. Money should be segmented into three buckets for short-term, medium-term and long-term needs.
From the archives: Is the bucket strategy superior to the 4% rule?
Short term is your bank cash, which should be three to six months' worth of your expenses. The medium-term bucket should hold between six months to five years of living expenses, while the long-term bucket is where most assets should sit.
"But given turbulent times in the market, you [should] have between three months to five years' worth of your expenses in a conservative position, which should also help with the psychological element as well," Shafransky said.
Of course, with inflation, tariffs and an overall affordability crisis in the U.S., people's buckets may not be as plentiful as they need to be. But overall, retirees should be fine as long as the market fallout remains subdued, advisers said.
"With higher spending lately, some of those cash reserves are getting used up faster. If the market is down, the focus is using cash first, possibly trimming spending a bit and avoiding selling investments if possible," said Joon Um, a financial adviser with Secure Tax & Accounting in Beverly Hills, Calif. "It becomes more of a problem if there's a long downturn while withdrawals continue - that's what really puts pressure on a retirement plan."
David Demming of Demming Financial Services in Aurora, Ohio, said events domestically and internationally often have minor effects on investment policy.
"The mistake people make is overreacting," he said.
-Jessica Hall
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March 21, 2026 08:10 ET (12:10 GMT)
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