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Congratulations, you’re a millionaire! Now what?

Blog Details
  • The Chamberlin Group
  • June 23 2025

Congratulations, You're a Millionaire! Now What? Part 1: Charting a Steady Course

Here's the real question: Will that money last? You've won the accumulation game, now it's time to master preservation and  distribution. A holistic retirement plan delivers strategies you can use to help secure a retirement that's as comfortable as it is sustainable. 

Creating Sustainable Income

Imagine your retirement as a tap. You’ve diligently filled the reservoir — your accumulated savings — but how do you control the flow? Most people get the reservoir right, that’s the accumulation phase. They've saved, invested, and built a substantial nest egg. But the tap? That’s where things get tricky. How do you transform that lump sum into a steady, reliable stream of income that will last throughout your retirement?

To kick off this series, we're focusing on one of the most pressing questions for any retiree or pre-retiree: ‘Will I have enough income to last my entire retirement?’ It’s one thing to excel at accumulating a large sum of money; it's another to ensure that money translates to a consistent, predictable, and sustainable income stream. The real challenge — the true art of retirement planning — is converting your assets into a reliable income that will support your desired lifestyle for the rest of your years.

A common, and often disastrous, pitfall is relying solely on investment growth for income. Many retirees assume their portfolio will continue to grow at the same rate it did during their working years. However, if you are drawing from your assets during a market downturn without a financial backstop, you risk depleting your funds much faster than anticipated. This is known as the Sequence of Returns Risk.1

Here's a short video of C2P Enterprises and JJ Smith Group founder Jason Smith explaining Sequence of Returns Risk on a recent episode of The Retirement Planner podcast:

Sequence of Returns Risk: An Example

Let’s consider two hypothetical retirees: Mr. Unlucky and Ms. Lucky. Both have accumulated the same amount of wealth. However, Mr. Unlucky retires in 1969, at the beginning of a period marked by significant market decline. He begins withdrawing funds to cover his living expenses, but the market's downward trajectory rapidly erodes his principal. By age 83, his funds are exhausted. Conversely, Ms. Lucky retires in 1979, right before a period of robust market growth. Her portfolio experiences substantial gains, and by the end of her retirement, she might end up with eight times her initial investment. (Reference 2)

 

The key takeaway here is that timing matters. The order in which you experience market returns during your early retirement years can have a profound impact on your long-term financial security.

To mitigate Sequence of Returns Risk, we strongly recommend strategies like bucket planning. This approach involves dividing your assets into different ‘buckets’ with varying risk levels and time horizons. The first bucket, for example, might hold enough cash and stable investments to cover your immediate income needs for the next few years. The second bucket might contain a mix of conservative investments to cover your income needs for the following five to ten years. And the third bucket might hold higher-growth investments designed to outpace inflation and provide long-term growth.

Bucket Plan

This strategy ensures you have access to stable income to cover your short-term needs, while allowing other portions of your portfolio to grow or bounce back from market downturns. It’s about creating a buffer, a safety net, to help protect your retirement income from the volatility of the market.

A crucial takeaway from this discussion is that successful accumulation does not automatically translate to successful distribution. We must proactively plan for income and strategically manage our assets in order to ensure a comfortable, secure, and sustainable retirement.

Strategic Planning for Market Volatility

Bucket planning can provide a “seatbelt” to help keep you on track when the market rollercoasters. But within that strategy, there are some factors you need to consider as you build out your buckets. buffer against Sequence of Returns Risk and market uncertainty 

  • Asset allocation involves strategically dividing your portfolio among major asset classes like stocks, bonds, and cash equivalents, based on your individual risk tolerance, time horizon, and long-term financial goals. Think of it as deciding the broad categories of your portfolio. For example, a more conservative investor might allocate a larger portion of their portfolio to bonds and cash, while a growth-oriented investor might allocate more to stocks.
  • Diversification, on the other hand, focuses on spreading investments within each asset class across various securities, sectors, or types to reduce risk. Think of it as choosing the specific components within those categories. So, within your stock allocation, you might diversify by investing in large-cap, mid-cap, and small-cap stocks, as well as stocks across different sectors like technology, healthcare, and utilities. Similarly, within your bond allocation, you might diversify by investing in treasury bonds, corporate bonds, and municipal bonds.

Imagine you're heavily invested in a single tech stock. If that company experiences a sudden downturn, your portfolio could take a significant hit. However, if you're diversified across multiple tech stocks and other sectors, the impact of a single company's decline could be minimized.

Our goal is to help you understand the inherent volatility of the market and develop an investment strategy that aligns with your risk tolerance and long-term financial goals. We want to empower you to navigate market fluctuations with confidence, knowing you have a plan in place to protect your financial future.

Investing wisely protects your future, but taxes, health care bills and other unexpected expenses can erode your hard-earned gains. So, in the next part of this series, we'll reveal strategies to help maximize your Social Security income, minimize your tax burden, optimize your Medicare coverage and keep more of your money where it belongs: in your pocket.

You’re Not Alone

Chamberlin is here to help you navigate the options and create a plan tailored to your needs, goals and dreams. Visit our online Learning Center for more retirement resources, and If you're ready to take the next step, we invite you to schedule a call with one of our experienced retirement educators today to take the first step toward a confident financial future.

Remember, your retirement dreams are closer than you think. Don't wait to build the retirement you deserve – take action now!

 

References

  1. Finke, M., Pfau, W. D., & Blanchett, D. (2013). The 4% rule is not safe in a low-yield world. Journal of Financial Planning, 26(6), 46–55.
  2. Blanchett, D., Finke, M., & Pfau, W. (2017). Low bond yields and safe withdrawal rates. Journal of Financial Planning, 30(1), 50–59.
  3. Social Security Administration. (n.d.-a). Benefits Planner: Retirement. Retrieved from https://www.ssa.gov/planners/retire/
  4. Congressional Research Service. (2021). Social Security: What percentage of income do benefits replace? Retrieved from https://crsreports.congress.gov/product/pdf/R/R47055
  5. U.S. Bureau of Labor Statistics. (2023). National compensation survey: Employee benefits in the United States, March 2023. Retrieved from https://www.bls.gov/news.release/ebs2.nr0.htm
  6. Social Security Administration. (n.d.-b). Benefits Planner: Social Security's delayed retirement credits. Retrieved from https://www.ssa.gov/planners/retire/delayretire.html
  7. U.S. Department of Labor. (n.d.). Continuation of health coverage (COBRA). Retrieved from https://www.dol.gov/general/topic/health-plans/cobra
  8. Investopedia. (n.d.-a). Cash value life insurance. Retrieved from https://www.investopedia.com/terms/cashvalueinsurance.asp
  9. Administration on Aging. (2020). Long-term services and supports. Retrieved from https://acl.gov/ltc
  10. Genworth. (2023). Cost of care survey. Retrieved from https://www.genworth.com/aging-and-you/finances/cost-of-care.html
  11. Morningstar. (n.d.). Understanding the 2000-2009 Lost Decade. Retrieved from https://www.morningstar.com/insights/archive/understanding-2000-2009-lost-decade
  12. Tax Foundation. (n.d.). U.S. federal individual income tax rates history, 1913-2023. Retrieved from https://taxfoundation.org/historical-income-tax-rates/
  13. Tax Policy Center. (n.d.). Historical average federal income tax rates. Retrieved from https://www.taxpolicycenter.org/statistics/historical-average-federal-income-tax-rates
  14. Internal Revenue Service. (n.d.-a). Roth IRAs. Retrieved from https://www.irs.gov/retirement-plans/roth-iras
  15. Internal Revenue Service. (n.d.-b). Retirement topics - required minimum distributions (RMDs). Retrieved from https://www.irs.gov/retirement-plans/retirement-topics-required-minimum-distributions-rmds
  16. Social Security Administration. (n.d.-c). Benefits Planner: Income taxes and your Social Security benefit. Retrieved from https://www.ssa.gov/planners/taxes.html
  17. American Bar Association. (n.d.). What is probate? Retrieved from https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning_info_center/probate_the_basics/
  18. Nolo. (n.d.). What happens if you own property in more than one state? Retrieved from https://www.nolo.com/legal-encyclopedia/what-happens-if-you-own-property-more-one-state.html
  19. Investopedia. (n.d.-b). Beneficiary designation. Retrieved from https://www.investopedia.com/terms/beneficiary.asp
  20. Farrell Financial Freedom. (n.d.). Why Ronald Reagan only made two movies per year. Retrieved from https://farrellfinancialfreedom.com/why-ronald-reagan-only-made-two-movies-per-year/
  21. Internal Revenue Service. (2025, February 13). Federal income tax rates and brackets. Retrieved from https://www.irs.gov/filing/federal-income-tax-rates-and-brackets

 

Market Volatility Bucket Planning Congrats, You're a Millionaire!