Retirees’ Worst-Case Reality: $1.7M Portfolio Drops $312K in 18 Trading Days
A 65-year-old couple retired with about $1.7 million in a 70/30 portfolio and planned to withdraw $68,000 annually under the 4% rule. In 18 trading days, their portfolio declined to roughly $1.39 million—a loss of about $312,000—as both stocks and bonds fell amid rising rates (VIX near 31; 10‑year yield up from 4.3% to 4.5%). Keeping the same $5,667 monthly withdrawal on the smaller balance would push the withdrawal rate to around 5%, increasing the risk of depletion before age 90. The piece argues a 24‑month cash buffer (about $136,000) could have allowed the portfolio to recover without selling equities, and suggests rethinking early-retirement allocations and applying guardrail withdrawal rules. In short, diversification isn’t a foolproof shield in a higher-rate environment; cash reserves are a crucial buffer for retirees.