Episode 136 – The Risk of Not Taking Risk: Why Completely De-Risking Your Portfolio Can Backfire

Insights from Last Paycheck Podcast Episode 136

Periods of global uncertainty have a way of rattling even the most disciplined investors. Geopolitical tension, market volatility, and unsettling headlines often spark the same question, especially among retirees.

Should I just get out of the market and play it safe?

In Episode 136 of the Last Paycheck, CFP professionals Archie Hoxton and Rob Hoxton tackle this question head-on. Their conclusion may surprise some listeners. While reducing risk feels comforting in the moment, completely de-risking an investment portfolio can introduce a different set of dangers, often more damaging and far less visible.

This episode focuses on what they call the risk of not taking risk.

Why the Desire to De-Risk Feels So Strong

Market volatility feels different when you are retired or nearing retirement. Your portfolio is no longer just a long-term growth engine. It is a primary income source meant to support you for the rest of your life.

Rob acknowledges how uncomfortable it can feel to watch a retirement portfolio drop 20 or 25 percent, even if those declines are historically temporary. That discomfort often leads to a powerful urge to stop the pain by moving to cash.

But reacting emotionally to volatility can create long-term consequences that are easy to underestimate.

Timing the Market Is a Two-Step Gamble

Many investors assume the danger lies in selling at the wrong time. Archie points out that timing the market requires getting two decisions exactly right. You must know when to get out and when to get back in.

History shows that very few investors manage this consistently without luck. Getting back into the market is often harder than getting out. Fear lingers, and the next downturn always feels just around the corner.

As a result, investors who move to cash often stay there far longer than planned, missing critical periods of recovery.

Risk Does Not Disappear. It Changes Form

One of the central ideas in this episode is that risk never disappears. When you remove market risk entirely, you take on other risks that are quieter but potentially more destructive.

Archie describes cash as the carbon monoxide of investing. It feels safe because there is no visible volatility, but the damage happens slowly and silently.

Three risks stand out.

Inflation Risk

Cash offers no meaningful protection against inflation. Even modest inflation steadily erodes purchasing power year after year.

An account balance may stay the same, but what that money can buy shrinks over time. Over ten, twenty, or thirty years, the cumulative effect can be devastating. Inflation does not announce itself loudly most years, but its impact compounds relentlessly.

Longevity Risk

No one knows how long retirement will last. Planning based on a fixed life expectancy can be dangerous, especially when inflation and unexpected expenses are factored in.

Rob explains why planners often assume longer lifespans, sometimes into the mid-nineties. The risk is not dying early. The risk is living longer than expected and running out of money.

Without growth in a portfolio, longevity risk increases dramatically.

Opportunity Cost

Perhaps the most overlooked risk is opportunity cost.

Every year spent out of the market is not just a lost return for that year. It is the loss of decades of compounded growth. Archie illustrates how even modest missed returns can translate into hundreds of thousands of dollars over time.

Those lost dollars may be needed later for healthcare, long-term care, or simply maintaining quality of life.

A Better Way to Think About Risk

Rather than viewing risk as something to eliminate, Archie and Rob advocate managing it intentionally.

One helpful framework is a bucket approach. Short-term needs are covered by cash. Intermediate needs are supported by bonds. Long-term needs are invested in growth assets like stocks.

This structure allows retirees to weather market downturns without panicking. When stocks decline, income can come from cash and bonds, giving the long-term portion of the portfolio time to recover.

The key is not avoiding risk entirely, but taking the right amount of risk for the right time horizon.

Investing Should Never Happen in a Vacuum

Throughout the episode, Rob emphasizes that investment decisions must be made within the context of a broader financial plan.

At Hoxton Planning & Management, portfolios are evaluated based on potential ranges of outcomes over defined periods, not just average returns. Those ranges are then compared to a client’s spending needs and long-term goals.

This approach allows clients to understand what short-term volatility might look like and whether their plan can withstand it. When risk is measured and aligned with a plan, it becomes far less frightening.

The Real Goal: Balance

The takeaway from this episode is not that risk should be ignored or embraced recklessly. Taking too much risk can be just as dangerous as taking too little.

For most retirees, the appropriate level of risk is moderate. Enough to outpace inflation and support longevity, but not so much that short-term volatility threatens essential income needs.

Finding that balance is far easier with clear planning, realistic expectations, and the right tools.

Your Next Step

If you have ever wondered whether your investment strategy truly aligns with your retirement goals, this is the right time to check.

Hoxton Planning & Management offers a free Investment Alignment Worksheet designed to help you evaluate whether the risk you are taking matches what you are trying to accomplish long term. It is a practical way to move from fear-based decisions to informed ones.

You may also choose to schedule a complimentary conversation with the Hoxton team to review your portfolio within the context of a full financial plan.

Risk is unavoidable. Mismatch is optional.

Download the Investment Alignment Worksheet or schedule your meeting.
Download the Checklist
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.

Episode 135 – The Retirement Countdown: Five Things You Must Do in the Final Year Before Retirement

Insights from Last Paycheck Podcast Episode 135

When retirement is a year away, excitement and anxiety often show up at the same time. Even people who have planned diligently for decades can feel a surge of stress as the reality of a final paycheck approaches.

In Episode 135 of the Last Paycheck, hosts Archie Hoxton and Rob Hoxton, CFP professionals at Hoxton Planning & Management, walk through what they call the Retirement Countdown. These are the five most important things to address when you are roughly a year or less from retiring.

While many of these steps are ideally done earlier, this episode focuses on what truly must be clarified before you make the transition from earning a paycheck to living off what you have saved.

Why the Final Year Feels Different

Retirement represents more than a financial shift. It is a psychological one.

During your working years, income feels controllable. You can work longer, take on more responsibility, or delay retirement if needed. Once you retire, income comes from decisions already made. Savings, investments, pensions, and Social Security replace a paycheck you could once rely on.

That shift can be deeply unsettling. Archie and Rob emphasize that thoughtful planning during this final year can dramatically reduce stress and replace uncertainty with confidence.

Step One: Run the Numbers and Identify the Gap

The first step in the retirement countdown is deceptively simple. Take inventory.

You need to clearly identify every source of income you expect to have in retirement. This may include Social Security, pensions, annuities, part-time work, or other income streams. Then compare that income to your anticipated spending.

For most retirees, income does not fully cover expenses. The difference between what comes in and what goes out is the retirement gap. That gap must be filled by withdrawals from your investment portfolio.

Understanding this number is foundational. Without it, every other decision becomes guesswork.

Step Two: Build a Smart Withdrawal Strategy

Once the gap is identified, the next question becomes where the money will come from.

Most retirees have multiple types of accounts. Pre-tax accounts like IRAs, Roth accounts, and taxable brokerage accounts all behave differently from a tax standpoint. The order in which you draw from these accounts can have a meaningful impact on how long your money lasts.

Archie and Rob stress the importance of coordinating withdrawals to minimize taxes and manage required minimum distributions later in retirement. A thoughtful distribution strategy can extend portfolio longevity and reduce unnecessary tax drag.

Step Three: Plan for Healthcare Costs

Healthcare is one of the most underestimated expenses in retirement.

Medicare eligibility begins at age 65, but even then, premiums for Part B, Part D, and supplemental coverage can be substantial. Those premiums are often tied to income, which means withdrawal decisions can directly affect healthcare costs.

For those retiring before Medicare eligibility, the challenge is even greater. Private health insurance can represent a significant financial burden and must be planned for carefully.

Rob shares an example of recent retirees facing healthcare costs approaching $26,000 per year. Yet many retirement plans fail to include a realistic healthcare line item at all.

Step Four: Design a Scalable Lifestyle

One of the most important concepts discussed in this episode is lifestyle scalability.

Retirement spending does not need to be rigid. In fact, flexibility can be a powerful planning tool. Being willing to spend a little less during market downturns and a little more during strong periods can help protect long-term financial security while preserving quality of life.

Scalability requires clarity. You need to know which expenses are essential and which are discretionary. That clarity often comes only through ongoing planning and regular review.

Debt can be a major obstacle to flexibility. While certain types of debt may make sense in retirement, high consumer debt reduces your ability to adjust spending when needed. Eliminating unnecessary debt before retirement can significantly increase peace of mind.

Step Five: Get Your Legal and Estate Documents in Order

The final step in the retirement countdown is administrative, but no less important.

Wills, trusts, powers of attorney, healthcare directives, and beneficiary designations should all be reviewed and updated. Documents should be easy to access, and trusted individuals should know where to find them.

Archie and Rob frame this as one of the greatest gifts you can give your family. Grieving a loss is hard enough. Leaving behind confusion or disorganization only adds to that burden.

Getting these documents finalized before retirement allows you to focus on living well, knowing that your affairs are in order.

The Value of Ongoing Planning

Throughout the episode, Rob makes a critical point. Retirement planning is not a one-time exercise.

While it is possible to create a snapshot plan, the greatest value often comes from ongoing management. Markets change. Spending evolves. Health needs shift. Having a plan that adapts over time helps prevent small issues from becoming serious problems later in life.

Your Next Step

If you are within a year or two of retirement, now is the time to move from uncertainty to clarity.

Hoxton Planning & Management offers a Retirement Readiness Checklist designed to help you assess income sources, spending, healthcare planning, and portfolio strategy in one place. It is a practical starting point for understanding where you stand and what still needs attention.

You may also choose to schedule a complimentary conversation with the Hoxton team to walk through your retirement countdown and ensure no critical steps are overlooked.

Retirement is a major transition. It deserves a plan.

Download the Retirement Readiness Checklist or schedule your meeting.
Download the Checklist
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.