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The average NFL player retires at 28. For the rest of us, retirement comes later but lasts much longer. The Romans invented retirement in 13 BC as end-of-life assistance for soldiers. Recipients lived maybe 2-3 years after claiming benefits. Today, you might be retired longer than you worked.
This fundamental shift changes everything about retirement portfolio strategy. The conventional wisdom about getting conservative at retirement was built for 5-7 year retirements, not 40-50 year ones.
The biggest challenge isn't mathematical. It's psychological. When paychecks stop, market volatility feels different. A 20% market drop that you shrugged off at 55 becomes paralyzing at 65 when you're living off your portfolio.
But automatic conservatism creates its own risk. If you need your money to last 40 years, parking it in bonds and cash almost guarantees you'll run out. Over any 20-year period in U.S. history, stocks have never generated negative returns. Bonds have actually been more volatile than stocks over 20-year rolling periods.
Early retirement years create what planners call sequence of return risk. If markets tank right after you retire, you're withdrawing money from a declining portfolio. That money never has a chance to recover. This is why the bucketing approach works. Keep 3-5 years of expenses in stable assets. Let the rest stay aggressive enough to grow over decades.
Modern portfolios need a third category. When stocks and bonds fall together (like they did in 2022), alternative investments can provide balance. Managed futures strategies were up double digits in 2022 while traditional portfolios struggled. The goal isn't higher returns. It's reducing overall portfolio volatility.
Retirement spending follows predictable patterns. The go-go years feature heavy travel and activity. The slow-go years see reduced mobility but steady spending. The no-go years require less discretionary spending but more healthcare costs.
Your portfolio needs to adapt through all three phases. The aggressive allocation that works in your 60s might need adjustment in your 80s. But the adjustment should be gradual and planned, not reactive.
The Romans had the right idea about taking care of people who served their time. They just couldn't have imagined how long that care would need to last.