One of the most significant risks retirees face is the sequence of returns risk, which is the danger that poor investment returns early in retirement will have a disproportionate impact on long-term financial security. This is because you are selling holdings at a loss to create income, reducing the value of your assets for future distributions (and potentially shortening how long your portfolio will last before depletion). And that’s true even if the market eventually recovers.  A few bad years early on can do more damage than the same bad years happening later. 

One way to protect yourself from this kind of risk is by using “buffer assets.” Buffer assets are financial resources that exist outside of the primary investment portfolio. What makes them unique is their lack of correlation with the market. Unlike your regular investments, buffer assets don’t drop in value when markets do. This