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    4 Ways to Fortify Your Retirement Against Market Whims

    “It is important to not confuse risk with volatility, because volatility is something we have to live with,” Ms. Benz said. “Checking your liquid and near-liquid reserves, that’s a way of understanding how much of a buffer you have and how long a downturn you can sustain.”

    For those looking to improve their flexibility, or ability to avoid selling in a volatile market, she often asks people to consider the answers to a range of questions, including: What would it look like to find a job that replaced the income you would require your portfolio to generate? What would your expenses look like if you downsized? She encourages people to consider incremental moves or changes, citing an example of a couple who wanted to live on the commuter train line in Chicago, but decided to move farther away from the city center, where housing was more affordable. The new spot allowed them access to the city but at a savings from their prior home.

    Delaying taking Social Security benefits becomes an even more effective strategy in bumpy markets, according to William Reichenstein, head of research at Social Security Solutions in Overland Park, Kan., and professor emeritus at Baylor University.

    “The best returning portion of your bond portfolio is actually delaying Social Security,” Dr. Reichenstein said. “Why do most people start as soon as they can or pretty close to as soon as they can? My strong expectation is, they haven’t learned deferred gratification.”

    In recent years, the number of people claiming benefits in their early 60s has been declining, with only about one-quarter of eligible 62-year-olds doing so in 2019, according the Center for Retirement Research at Boston College.

    By Dr. Reichenstein’s calculations, assuming a healthy retiree with an average life span, deferring benefits generates an 8 percent return each year that they hold off. For example, a 67-year-old would collect 108 percent of his or her expected benefit by waiting until age 68, and 116 percent by delaying until age 69. Conversely, those who collect earlier, at age 62, receive only 70 percent of their expected benefit with incremental increases each year they hold off.

    As an example, consider a 62-year-old with a life expectancy of 90 who began collecting a $1,400 monthly check. If he or she had waited to begin benefits at age 70, with the same life expectancy, the 62-year-old would have received an additional $124,800 in real benefits — not factoring in cost-of-living increases — and would break even at age 80 and five months, he said.

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