Retirement planning isn't about predicting the next market crash

Rob Carrick recently wrote that if you're worried a trade war or market downturn could derail your retirement, the real issue isn't the market itself, it's the financial plan behind it.

I think that's an important point.

Many retirees remember how quickly markets fell during the tariff-related selloff in early 2025. When portfolios decline, the concern isn't just the drop in value. It's the fear of having to sell investments at depressed prices to fund ongoing RRIF withdrawals and living expenses.

Carrick's solution is sensible: keep several years of withdrawals in safer holdings such as cash equivalents, GICs, or money market investments. Having a dedicated pool of liquid assets allows retirees to meet spending needs without selling stocks during a downturn, giving the equity portion of the portfolio time to recover.

Where I would expand on his thinking is the choice of defensive assets.

One option often overlooked is government-issued inflation-linked bonds. In Canada, Real Return Bonds (RRBs) and in the United States, Treasury Inflation-Protected Securities (TIPS), are among the few investments designed to increase their principal value when inflation rises. While traditional bonds can struggle during unexpected inflationary periods, these securities can help preserve purchasing power. Held inside RRSPs or RRIFs, investors can also defer taxation on the income they generate.

I would also note that Treasury Bills deserve consideration alongside GICs and money market funds. Today's T-bills offer competitive yields, can typically be sold at any time without penalty, and provide excellent liquidity. In many cases, money market funds hold these same short-term government securities, making T-bills a direct and efficient way to access this part of the market.

The larger lesson, however, is that retirement portfolios must balance two competing objectives: stability and growth.

Holding three years of planned withdrawals in safer assets can provide the confidence to weather market volatility. At the same time, retirees may still need their portfolios to grow over a retirement that could last 25 years or more. That's where a globally diversified portfolio of quality stocks continues to play an important role.

A portfolio manager's job is to strike that balance. Too much cash can erode long-term purchasing power. Too much equity can create unnecessary anxiety and sequence-of-returns risk when withdrawals are being made. The goal is not to eliminate market volatility but to build a portfolio that can withstand it.

No one knows what will cause the next market correction. It could be tariffs, inflation, geopolitics, or something entirely unexpected. What matters most is having a plan that provides cash when you need it and growth when you need it most.

Fraser Betkowski

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.