Episode 109 – How to Protect Your Portfolio Without Missing the Market

When markets rise, we celebrate. When they fall, panic sets in.

This emotional rollercoaster becomes especially intense once you retire and the paychecks stop. In Episode 109 of the Last Paycheck Podcast, CERTIFIED FINANCIAL PLANNER® professionals Archie and Rob Hoxton break down two options for reducing portfolio anxiety while staying invested: buffer ETFs and fixed indexed annuities.

The Problem: Fear of Loss vs. Need for Growth

Rob shares a common scenario—retirees threatening to cash out entirely when markets dip. The instinct is understandable, but the consequences can be costly. Cash and CDs often don’t outpace inflation, which means your retirement savings could lose purchasing power over time.

Most retirees still need growth—but also want stability. That’s where buffer ETFs and fixed indexed annuities come in.

What Are Buffer ETFs?

Buffer ETFs are exchange-traded funds that offer a unique tradeoff:

  • Upside capped (e.g., 15%)
  • Downside protection (e.g., first 10% loss absorbed)
  • One-year holding periods

These investments use options strategies to deliver a portion of market gains while softening some losses. They’re liquid like any ETF, but to benefit fully, you must hold for a full cycle.

Key Pros:

  • Limited downside exposure
  • Lower cost than annuities
  • Market-based structure

Key Cons:

  • Gain limits in strong years
  • Still some risk if market drops steeply
  • Reset annually—timing matters

What Are Fixed Indexed Annuities?

These are insurance products that link your returns to a market index (like the S&P 500) but protect you from losses entirely.

  • No market losses (your worst year = 0% return)
  • Capped growth (e.g., 12%)
  • Tax deferral on gains (non-IRA assets)

Archie and Rob stress that not all annuities are created equal. The best ones are low-cost, non-commissioned, and provide liquidity after a short lock-in period. But they can still have market value adjustments, limited upside, and tax consequences on withdrawal.

Key Pros:

  • Full downside protection
  • Growth potential
  • Tax-deferred (in non-qualified accounts)

Key Cons:

  • Complex structures
  • Income taxed as ordinary income
  • Limited liquidity depending on contract

Should You Use One of These Tools?

It depends on your retirement needs, timeline, and risk tolerance. If you’re the type to lose sleep during market drops—or already considering shifting everything to cash—these vehicles might offer a happy medium.

But they’re not one-size-fits-all. Rob and Archie recommend working with a fiduciary to evaluate whether these fit your broader plan.

Final Takeaway

Buffer ETFs and fixed indexed annuities are designed to offer peace of mind for cautious investors. They trade full market gains for some downside protection—and can help nervous retirees stay invested for the long haul.

But every financial decision comes with tradeoffs. Make sure you understand the mechanics, risks, and rewards before jumping in.

Evaluate your own risk comfort and investment goals.

Download the Market Participation Strategy Audit, then schedule a no-pressure consultation to get personalized advice on whether these tools are a good fit for your plan.
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Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.