Why Principal Protection Matters More Near Retirement

Long-term average returns are reassuring on paper and dangerous in practice. The decade surrounding retirement — roughly five years before and five years after — is when the order of returns can permanently shape outcomes.

A bad market early in retirement, combined with ongoing withdrawals, can lock in losses that no subsequent recovery fully repairs. This is sequence-of-returns risk, and it argues for a meaningfully different posture during this window.

Protecting principal during this period doesn't mean abandoning growth. It means structuring the portfolio so that essential income never has to be funded by selling assets at depressed prices.