It's Easy to Say "Ride It Out" When You Have Money to Spare
They did what they were told. They went to work every day, contributed to the 401(k), took advantage of the company match and increased their contribution whenever the budget allowed. Some even reached the point where they were maxing it out. They were not rich. They were not flying first class, collecting vacation homes or spending summers gallivanting around Europe. They were paying a mortgage, replacing appliances, keeping two vehicles running, helping their children when they could and watching the cost of homeowners insurance climb every year. They worked, they saved and they tried to make responsible decisions. By most definitions, they were doing okay.
But "doing okay" is not the same as having money to spare, and that distinction gets lost in far too many retirement conversations. Financial advice is routinely handed out as though every person approaching retirement has the same ability to absorb a loss. They do not. There is an enormous difference between having enough money to retire and having so much money that a market crash does not disrupt the cash flow you rely on for everyday life.
I see that difference firsthand because I have both kinds of retirees in my circle. I know wealth retirees who are genuinely enjoying the life they worked for. They travel, go out, help their children and grandchildren and make plans based on what they want to do rather than only what they can afford to do. If the market falls, of course they will feel it. Nobody enjoys opening an account statement and seeing that a significant amount of money has disappeared. The difference is that the loss is unlikely to determine whether they can replace their air conditioner, pay the property tax bill or buy groceries without using a credit card.
I also know people who worked their entire lives, saved what they could and did many of the things they were told were responsible. They are not destitute, and they are certainly not financial failures. On paper, many of they may even appear to be doing well. The difference is that their retirement does not contain enough excess to absorb a major loss without that loss changing how they live. For them, a market crash is not merely a lower number on a quarterly statement. It can change when they retire, where they live, how much they spend, whether they travel, how much they can help their family and how nervous they become every time something in the house breaks.
It's easy to tell someone to ride it out when they have money to spare. It is easy to preach patience when their ability to pay the bills does not depend on the balance recovering quickly. It is easy to call a downturn a buying opportunity when they have enough cash available to continue living without touching the investments that are losing value. It becomes a very different conversation when every dollar matters and the person being told to wait no longer has a paycheck coming in.
That is the retiree I want included in the financial conversation. This is not because wealthy retirees do not matter or because investing has not worked extraordinarily well for many people. It is because advice built around someone who can afford to wait out almost anything is not automatically appropriate for someone whose retirement has no room for a badly timed disaster. The market may treat their accounts the same, but life will not teat the people behind those accounts the same.
Let's ask the person who retired into the dot com crash how well their financial education worked. Let's ask the person who watched years of retirement savings disappear while the market spent years falling instead of bouncing back neatly by the following quarter. Then let's ask the person who eventually recovered from that crash, finally began to feel secure again and watched the financial crisis tear though the market a few years later. From it's October 2007 high to its March 2009 low, the S&P 500 fell by more than 55 percent. Imagine watching $700,000 become something closer to $300,000 just as the money was supposed to begin supporting the life you spent decades working toward.
Yes, that is simplified math. A diversified retirement portfolio would not necessarily track the S&P 500 dollar for dollar. Asset allocation, withdrawals, fees, bonds and other investments would all affect the actual outcome, and that is precisely the point Real people do not live inside a clean hypothetical. They have mortgages, property taxes, insurance premiums and grocery bills. The air conditioner still breaks when the market is down. Prescriptions still need to be filled, and retirement withdrawals do not politely pause because Wall Street is having a bad year.
The people who suffered during those crashes were not necessarily reckless investors who ignored every warning and gambled their life savings. Many of them saved, diversified, stayed invested and followed the rules. The problem is that following the rules does not create more time. When you are 42 and the market falls, you may have decades to continue contributing and wait or the recovery. Your paycheck is still covering your life, and your retirement contributions are purchasing investments while prices are lower. When you are 67 and the market falls, you may be doing the exact opposite. You are no longer putting money in. You are taking money out, and that changes everything.
If you must withdraw money from an account while its investments are down, you may be forced to sell more shares to generate the same amount of income. Those shares are gone, which means they are no longer in the account to participate when the market eventually recovers. The market may recover while the retiree's account never fully recovers with it. This is sequence of returns risk, and it is one of the most important risks facing someone who is near or newly in retirement. Yet plenty of people spend their entire working lives being taught how to accumulate money without anyone clearly explaining what happens when accumulation becomes distribution. They were taught how to build the account, but they were never taught how to retire from it.
And please spare me the fantasy that everyone approaching retirement has a giant emergency fund sitting beside the retirement account. According to the Federal Reserve's most recent report on the economic well being of American households, 59 percent of adults experienced at least one major unexpected expense during 2025. Vehicle repairs or replacements were the most common, followed by major home or appliance repairs and unexpected medical expenses. Only 55 percent had enough emergency savings to cover three months of expenses, and just 35 percent of people who had not yet retired believed their retirement savings were on track. That is not a small group of people who simply refused to plan. That is a massive portion of the country trying to build a future while paying for the present. Federal Reserve household report
Real life is doing okay until the transmission goes. It is contributing to a 401(k) while carrying a credit card balance because the roof could not wait. It is building retirement savings while helping an aging parent, supporting an adult child or paying a medical bill that was nowhere in the monthly budget. It is having money in an account you are desperately trying not to touch while simultaneously wondering how you are going to pay the bill sitting on the kitchen counter. None of that automatically makes someone financially irresponsible. It makes them an American household trying to absorb expenses that do not care what the financial planning textbook says they should have saved.
Right now, credit card balances in the United States are approaching a record $1.26 trillion. At the same time, the financial news is celebrating another rise in the S&P 500. Those two headlines sit beside each other as though they describe the same economy, but they do not. One describes the economy of people watching the value of their assets rise. The other describes the economy of people using debt to keep their lives functioning. Sometimes, inconveniently for the people who want every household placed into a clean little category, they are the same people.
A person can have money in a 401(k) and still need a credit card to replace the refrigerator. A family can earn what appears to be a respectable income and still have almost nothing left after the mortgage, insurance, utilities, groceries and car payments. Someone can be doing everything possible to prepare for retirement and still be one hospitalization, job loss or major repair away from watching the entire plan unravel. Looking at someone’s income or retirement account without looking at the financial demands surrounding it tells you very little about how secure that person actually is.
Then there is the student loan crisis, because student debt does not disappear simply because someone reaches middle age or begins thinking about retirement. Millions of borrowers are trying to save for the future while still paying for an education they received years or even decades ago. As of March 2026, approximately nine million federal student loan borrowers were in default, representing more than $220 billion in outstanding loans. Another 8.4 million borrowers had loans in forbearance. The entire federally managed student loan portfolio stood at approximately $1.64 trillion. Federal Student Aid report
These are not all 22 year olds who recently graduated from college. They are parents, homeowners and workers in their forties, fifties and sixties. Some borrowed for their own education, while others took out loans to help their children. Some have made payments for years and still carry balances large enough to affect what they can save, when they can retire and how much financial breathing room they have today. Now place those student loans beside the credit card balances, mortgage payments, medical bills, property insurance and ordinary household emergencies, and then tell that person to simply save more.
Tell them to max out the 401(k), build six months of emergency savings, eliminate every debt, contribute to a Roth IRA, prepare for rising healthcare costs and somehow maintain enough disposable income to enjoy the life they are working so hard to protect. With what money? This is not an excuse to avoid planning. It is the reason planning must become more realistic. People are trying to build retirement accounts while their present lives continue demanding every available dollar. They cannot afford to waste the money they manage to save, and they certainly cannot afford to discover at 63 that their entire retirement strategy depends on the market cooperating at precisely the right time.
Coincidentally, that is almost exactly the person featured in a recent MarketWatch article. He is nearly 63 and wants to retire at 65 and a half, assuming he can find affordable healthcare for himself and his younger wife. He has $135,000 across two accounts sitting in a growth fund with negative returns. He told his adviser that he feels as though he is riding a sinking boat, and his adviser’s response was that it is simply market timing. Three quarters of this man’s portfolio is currently in an annuity that will soon be beyond its surrender period. He plans to take the money out when he retires, but he has no idea where to put it so that it can generate the income he and his wife will need. MarketWatch article
That is the flashing neon sign in the entire story. This man does not need another random investment. He needs an actual retirement income plan. He needs to know exactly what type of annuity he owns, what it guarantees, what income options are available, what the surrender schedule is, how withdrawals would be taxed and whether the contract still fits his needs. He needs someone to calculate how much monthly income he and his wife will require and then determine which portions of his money should provide growth, liquidity, protection and dependable income.
Instead, one of the professionals quoted in the article suggested that it might be more appropriate to transfer the annuity money into a traditional IRA and invest it in diversified index funds. This man is already frightened by the performance of his growth fund. He wants to retire in two years, needs income for two people and does not understand where that income will come from. One of the proposed solutions is to take the money currently sitting in an annuity and put it back into the market. You cannot make this up.
The article discusses the annuity’s possible fees, surrender charges, complexity and tax consequences. Those are all legitimate considerations and absolutely should be examined, but where is the complete conversation about income? Where is the comparison between keeping the existing annuity, exchanging it for a more appropriate contract, using an available income option, transferring it into a market based account or combining several strategies? Where is the actual math showing what each option could provide him and his wife every month? You cannot tell someone approaching retirement that a product is too complicated while simultaneously offering a plan that leaves the person unable to explain how next month’s income will be produced.
One professional in the article recommended keeping seven to nine years of spending needs in fixed income so the retiree would not be forced to sell investments during a market downturn. That recommendation quietly admits the entire premise of this discussion. A person approaching retirement needs a portion of their money positioned somewhere other than the stock market so that a downturn does not dictate how they live. They recognize the problem. They simply refuse to have a complete conversation about all of the available solutions.
The 2026 Retirement Confidence Survey found that 65 percent of workers considered debt a problem for their household, with one quarter calling it a major problem. Fewer than three in five workers said they had enough savings to handle an emergency expense. These are the people building retirement plans. They are not millionaires with enough excess money to treat every downturn as a buying opportunity. They are people who worked, saved and made progress, but whose financial lives still have very little room for error. That margin for error becomes even smaller when the paycheck stops. Employee Benefit Research Institute
According to the United States Bureau of Labor Statistics, only 14 percent of private industry workers had access to a traditional defined benefit pension in March 2025. Meanwhile, 70 percent had access to a defined contribution plan such as a 401(k). That shift matters because a traditional pension places much of the responsibility for producing retirement income on the plan, while a 401(k) places the responsibility on the worker. The worker must decide how much to contribute, how to invest it, how much risk to accept, when to retire, how much to withdraw, how to adjust for inflation and how to make the money last for a lifetime they cannot predict. United States Bureau of Labor Statistics
We handed ordinary workers that enormous responsibility and called it freedom. Then we gave many of them the same shallow financial education: contribute, diversify, stay invested, do not panic and remember that the market always comes back. The problem is that “the market always comes back” is not an income plan. Eventually is not a date. Eventually does not tell you which bill to stop paying while you wait. Eventually does not replace the investments you were forced to sell to create income during a downturn. Eventually is cold comfort when you are 70 years old and afraid to spend money because you do not know whether the account must last another five years or another 25.
This is where the financial conversation needs to get bigger. Why are more people not taught to divide their money according to the job it needs to perform? Some money may be positioned for long term growth. Some may need to remain liquid for emergencies and planned expenses. Some may need to produce dependable income, and some may need to be protected from direct market losses. That does not mean pulling every dollar out of the market, and it does not mean every person needs an annuity or a permanent life insurance policy. It means the conversation should not end with the 401(k).
Fixed annuities exist. Fixed indexed annuities exist. Contractual lifetime income options exist. Insurance products with living benefits exist. Strategies designed to protect principal from direct market losses exist. These products come with rules, costs, limitations and contractual terms that must be understood. They may include surrender periods, and any guarantees depend on the financial strength and claims paying ability of the issuing insurance company. They are not appropriate for every person or every dollar. They do, however, perform financial jobs that a traditional market account does not guarantee it will perform.
That is not an argument for replacing investing. It is an argument for completing the education. Show people what happens if the market rises, and then have the courage to show them what happens if it falls during the first year of retirement. Show them the historical average return, but also explain why an average does not reveal the order in which those returns will arrive. Show them the projected account value at 65, and then show them how that account could create income at 66, 76 and 86. Explain the growth potential, taxes, withdrawals, costs, risks and restrictions. Show them what is guaranteed, what is not guaranteed and which options could protect a portion of what they spent a lifetime building.
I am not talking about protecting every dollar from every possible risk. The market is not evil, and no financial product can magically eliminate uncertainty. I am talking about recognizing that the person who saved that money cannot go back and work another 40 years if the plan fails. That person deserves more than a pie chart and a lecture about staying the course. They deserve to know whether some of their retirement income can be protected, whether all of their money must remain exposed to the same risks and whether the strategy they used to grow an account is also capable of supporting an actual retirement.
These people do not need another lecture about discipline. They need someone willing to look at the whole picture and understand that a person can earn a decent income and still feel broke. Someone can contribute to a 401(k) while carrying student loans and credit card debt. A household can appear financially stable while having no room for a medical bill, a major repair or a badly timed market crash. These people need their options explained before they are forced to make decisions from fear and panic.
Most of all, they deserve that education before the next crash, not while they are sitting at the kitchen table staring at a balance that no longer looks like retirement and being told they simply need to wait. The market came back after the dot com crash, and it came back after the housing crash. It has eventually come back after every major decline so far. That is only half the story. The question nobody seems interested in asking is whether the people retiring into those crashes had enough money, enough time and enough options to come back with it.
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