How Do Different Investment Portfolios Fare in Retirement? A Case Study

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How Do Different Investment Portfolios Fare in Retirement? A Case Study

By: Robert Cucchiaro, CFP® President at Summit Wealth & Retirement Partners

If you have ever read one of Nick Murray’s many great books or his monthly newsletter, you will know he recommends an all equity portfolio – even in retirement. A phenomenal book by Nick Murray “The New Financial Advisor” came out around 2000, in which of course as usual, he recommends an all-equity portfolio.

Today I want to evaluate how this advice played out over the last 25 years, especially compared to the classic 60/40 portfolio (60% stocks, 40% bonds), whose origins are surprisingly mysterious. And what happens when alternative investments—like trend following, gold, and merger arbitrage—are included in a retiree’s drawdown strategy?

The Retirement Scenario

We will be looking at 4 retirees with various portfolios.

Picture a 65-year-old retiree who began retirement on January 1, 2000, with a $1 million portfolio.

Each scenario assumes:

The retiree withdrew 4% of their starting balance per year
Withdrawals were made monthly
Withdrawals were fully adjusted for inflation throughout retirement

Retiree A: 100% S&P 500

In 2021, at the famous Berkshire Hathaway annual meeting, Warren Buffett proclaimed that buying the Vanguard S&P 500 ETF is the single best investment one can make.

So, let’s start with Retiree A, who invested 100% of their portfolio in the S&P 500 on January 1, 2000.

Retiree A experienced a turbulent 25 years. The S&P 500 saw annualized volatility of about 19–20% and suffered two major drawdowns during the Dotcom Bubble and Global Financial Crisis.

Retiree B: Global Equity Diversification

Next, Retiree B sought more diversification, adding global stocks to their equity portfolio.

While still subject to the same high volatility and massive drawdowns as Retiree A, the international exposure slightly cushioned their results as their portfolio had an internal rate of return of 3.9%, leaving them with $353,000.

Financial Planning for Securing Retirement

Retiree C: The Classic 60/40 Portfolio

Retiree C preferred a more balanced approach.

Favoring the diversification of global equities but aware of sequence-of-returns risk, they allocated 40% to bonds and rebalanced annually.

This strategy delivered a much smoother ride with about 11% volatility and shallower drawdowns.

So far:

Internal rate of return: 5.2%
Current portfolio balance: $948,000

Retiree D: Stocks, Bonds, and Alternatives

Finally, Retiree D went a step further, complementing global stocks and bonds with alternative assets such as:

Trend following
Gold
Merger arbitrage

These assets have a low correlation to traditional markets.

Recognizing the pitfalls of “rebalancing luck,” Retiree D adopted rebalancing bands to manage their exposures more dynamically.

Over 25 years, this resulted in:

Smoother drawdowns
Lower volatility, like Retiree C’s experience
Even higher returns at 6%

Retiree D is the only one with more money than they started with: $1.46 million.

Key Takeaways: Why All-Equity Falls Short in Retirement

While Nick Murray and Warren Buffett make strong cases for the power of equities in building wealth, this analysis suggests an all-equity approach may not serve a retiree well.

The key issue is sequence of returns risk—the danger that poor market returns early in retirement irreversibly damage a portfolio when withdrawals are ongoing.

During the accumulation (saving) phase, maximizing return is usually optimal as volatility matters far less. But in retirement, a portfolio needs both growth and resilience.

When equities suffer, retirees with only stocks are forced to sell during downturns, which can erode capital irreparably.

By incorporating bonds and alternative assets, retirees can draw from less-volatile portions of their portfolio when stocks are down, protecting principal and increasing the odds of portfolio’s survival through volatile markets.

Final Thoughts

Ultimately, for retirees relying on their portfolios, the most resilient approach combines stocks, bonds, and alternative investments.

This diversified mix:

Better navigates drawdowns
Mitigates sequence-of-returns risk
Gives retirees the highest chance of maintaining—and even growing—their wealth throughout retirement

Testfolio was used for all data.

Robert Cucchiaro, CFP®

President at Summit Wealth & Retirement Partners

Robert Cucchiaro, CFP®, is a trusted financial planner who helps individuals and families build clarity, confidence, and long-term security around their money. Based in Eagle, Idaho, Robert specializes in guiding clients through thoughtful financial planning, helping them make informed decisions around retirement, investments, and overall wealth strategy. Known for his practical, client-centered approach, he focuses on simplifying complex financial concepts and aligning strategies with each client’s personal goals and values. Through education, transparency, and personalized guidance, Robert serves as a steady partner for clients seeking to make smart financial choices and plan for a more secure future.

3 Reasons Why I love HSAs

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3 Reasons Why I love HSAs

By: Nicole C. Carson, CFP®, MBA, Founder and Financial Planner

A Health Savings Account (HSA) is one of my favorite tools for both medical spending and long-term planning. An HSA lets you set aside pre-tax money specifically for qualified medical expenses. I have used mine for glasses, pharmacy items, and even therapy, which has been so helpful.

HSAs are available to anyone enrolled in a high deductible health plan, which usually means lower premiums but higher deductibles compared to traditional plans. One thing to keep in mind is that you must be in a high deductible plan to qualify, and that type of plan is not right for everyone. It is important to connect with me or your financial professional to choose a health plan that fits your needs.

Here are a few benefits of using a Health Savings Account.

SAVINGS FOR MEDICAL EXPENSES

HSAs let you set money aside for medical expenses such as copayments, deductibles, prescriptions, and other qualified healthcare costs your insurance may not cover. This can ease the stress of unexpected medical bills and help you stay ahead of out-of-pocket costs.

INVESTMENT OPPORTUNITIES

Some HSA providers offer an investment feature once you reach a certain balance. This means your HSA can grow through interest, dividends, or market gains. Over time, this growth can create a meaningful pool of money you can use when you need it most.

Portability

Unlike Flexible Spending Accounts, which often follow a use it or lose it rule, HSA funds roll over every year. The account stays with you if you change jobs or insurance, and the money can continue growing for the long term.

Those are the reasons I like HSAs. Now here is why I love them.

HSAs offer a triple tax advantage. There are three ways an HSA can save you money.

Tax deductible contributions

Contributions are made with pre-tax dollars, which lowers your taxable income for the year. This is especially valuable if you are in a higher tax bracket.

Tax free growth

Any growth inside the account is not taxed along the way. This allows the balance to build without losing money to annual taxes.

Tax free withdrawals for qualified medical expenses

When you use your HSA for eligible medical expenses, the withdrawals are tax free. This covers doctor visits, prescriptions, certain procedures, and more.

Your HSA as a Backup Retirement Account

Your HSA can also act as a backup retirement account. This is especially helpful for clients who have already maxed out their other retirement accounts or are not eligible to contribute to one.

If you take money out before age 65 for something other than medical expenses, you will owe income tax and a 20 percent penalty, so I do not recommend this unless it is an emergency. After age 65, that penalty goes away. You can still use the funds for medical expenses tax free, and if you withdraw money for other reasons, you will simply pay income tax, similar to a traditional IRA.

Another bonus is that HSAs do not have required minimum distributions. If you want to let the account grow, you can. You can also name a beneficiary so that the assets pass to a loved one, your trust, or a charity.

Your HSA can also act as a backup retirement account. This is especially helpful for clients who have already maxed out their other retirement accounts or are not eligible to contribute to one.

Nicole C. Carson, CFP®, MBA

Founder and Financial Planner at 2nd Story Wealth Partners

Nicole C. Carson, CFP®, MBA, is a compassionate, fee-only financial planner who helps women and families take control of their financial lives with clarity and confidence. As the founder of 2nd Story Wealth Planning, she specializes in guiding clients through major life transitions, simplifying complex decisions, and aligning their money with their values. With a strong background in retirement planning, goal setting, and cash flow strategy, Nicole empowers clients through education, transparency, and a highly personalized approach—ensuring they always have a trusted advocate by their side as they build their next financial chapter.

Do Stay-at-home Moms Really Need Life Insurance?

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Blog Series

Do Stay-at-home Moms Really Need Life Insurance?

He scoffed at me and said, ‘No, she doesn’t earn any money!’ I was really surprised by this, given how busy she was and how many responsibilities fell to her.

Years ago I got into an argument with a friend. He was a high-income lawyer whose wife had taken a break in her career to take care of their four kids. I asked if they had life insurance on her. He scoffed at me and said, “No, she doesn’t earn any money!” I was really surprised by this, given how busy she was and how many responsibilities fell to her.

After 23 years as a financial advisor and licensed insurance agent, I’m no longer surprised. I know how common his opinion is. Unfortunately, I was unable to convince him that buying life insurance on his wife was worth it. Today I hope I can convince you.

Too many people believe life insurance is only needed on breadwinners.

Why does anyone need life insurance?

I always say as soon as another person is dependent on you, you should think about getting some insurance. Most calculators designed to help you decide how much you need start with the question, how much do you make?

The idea is that if the breadwinner, let’s call him dad, were to die and thus his income stopped, the death benefit would provide money the family could use to pay their bills.

I totally agree the breadwinner needs to have life insurance – probably much more than they do right now. But even if dad has millions of dollars of coverage, that still leaves a big hole in the family risk management. Tying life insurance need to income perpetuates the myth that women’s unpaid work has no value. The perspective of the insurance needs calculators is not really surprising when you think about it. Raising children and caregiving in general is vital work to our society. And yet, although our culture claims to value family, such work is consistently undervalued. It is evident in the low wages of teachers, childcare workers and healthcare aides.

Money is an interesting thing. It is important to survival because it’s how we get the things we need – both our most basic needs and the things that make life more enjoyable – often we get the priorities flipped. We tend to value things based on their price tag. It’s a type of mental short cut we use, sometimes without realizing it. A $70 bottle of wine must be much better than a $17 bottle, right?

So, if a mother’s work in the home is unpaid, does it really have any value? Of course it does, it’s just a bit invisible. A study by Salary.com valued stay-at-home-moms’ work at a median salary of $178,000 per year!

An analysis from Oxfam in 2020 reported that unpaid work by women in the U.S. would be worth $1.5 trillion in 2019, using minimum wage per hour for its calculations. And I would argue that moms should make much more than minimum wage!
And yet there’s no paycheck, no dollars coming into the bank account for all the hours we moms work. No visual or tangible representation of the crucial value of what we do, which makes it easy to overlook in the broader financial plan for the family.

What would it cost to replace all the work done by a mom who dies prematurely?

Now let’s imagine the non-working spouse, let’s call her mom, is tragically out of the picture. Obviously, the family will be devastated – the emotional cost of losing a parent is real and lasting. But let’s look at the practical day-to-day impacts. Who will step up to do all the jobs a mom fills in a day, a month, a year? It’s a big list, as we know.

Childcare worker
Cook
Housekeeper
Laundress
Driver
Shopper for food, clothing, and everything else
Coordinator of kid schedules and activities
Supervisor of school expectations and homework
Healthcare manager, scheduling and driving to doctor, dentist and wellness appointments
Bookkeeper and bill payor
Travel and event planner
Communications specialist
And probably 12-25 others I’ve forgotten!

One person had been doing all this. And now she’s gone. Is it realistic to think that the remaining members of the family can or will step up to do all of the jobs? That would be tough, especially if the kids are young. Dad may be working long hours to keep up his income.

Unless extended family steps in, most likely they’re not going to find someone to do it all for free. So, they’ll need to pay – probably more than one person. This of course increases the expenses of the household, with same income. And let’s face it, most American families don’t have much wiggle room in their cash flow already.

What would life insurance enable?

Let’s imagine again that mom is suddenly gone. But this time a large check arrives in the mail a few weeks later. Everyone is devastated. Life will never be the same. And, there’s a pot of money available to help with the logistical issues.
Now it wouldn’t be such a stretch to pay someone to do some or all of mom’s jobs.
If dad wanted to cut back on work in order to do some of the home tasks himself, there would be money to replace his reduction of income. Or the insurance check could be used to pay off the mortgage and fund college savings accounts, which in turn allows dad to work less.

It’s possible that the stress on family members will increase costs for mental health and/or wellness services. Money in the bank means they wouldn’t have to deny themselves care.

One friend of mine took his kids out of school on a giant trip, and even hired a tutor to go with them so the boys could keep up with school, after the tragic death of his wife. After witnessing and caring for her long and painful illness, he decided this would be a balm and a bonding experience for them.

God forbid both parents die, having insurance on mom as well as dad means more assets to whoever steps into the custodian/caregiver role for the children. That is a huge obligation for someone to take on, and of course, you’ll want to ease the financial burden on whomever is looking after your precious babies.

As always, money allows choices, options, and flexibility. Money is NOT a cure-all for the situation. It never is. But having life insurance on mom can avoid piling a financial disaster on top of the emotional one.

How much insurance do you need?

How much insurance should you have? Probably a number that sounds really big. The answer, as with so many things around money, is “it depends.” What do you want the money to enable if, God forbid, you were gone? Here are some ideas on how to answer the question:

Goal 1

Provide funds to pay for one or more service providers.

Do some research on what services cost in your area. Don’t assume family will do everything. Bad things can happen to them as well – illness, disability, moving for work, passing away. Maybe your calculation looks something like this:

House cleaning once a week +
Driving 1 hour per weekday +
Tutoring 3 hours a week +
Food delivery 3 nights a week = $XX/month

Let’s say that totals up to $2,400/month x 12 months per year = $28,800 per year.

For how many years would you need these services?

Goal 2

Pay off the mortgage to relieve that monthly expense.

How much do you owe on the house? What is the annual bill for taxes, insurance and maintenance?

Goal 3

Fund the college savings accounts

What type of school would you like your kids to attend, and how much of the bill do you want to cover? Then you can use a calculator like this one to come up with a number.

You can see how the numbers add up quickly. The really short answer is, it’s hard to have too much. Most people have too little. (By the way, while you’re doing this exercise, make sure to look at how much you have on your breadwinner spouse as well! It may be time for a top-up.)

Possible Hurdles:

Isn’t insurance expensive?

Actually, no. Here’s how to think about it. The purpose of insurance is risk management. It should address a possible event that may be unlikely but would be financially devastating.

We have homeowner’s insurance in case of a house fire or a tree falling through the roof. Because it would be really expensive to repair or replace our house, we pay a more modest annual cost so the insurance company would help us pay for those needs, should they arise.

The idea is, for a small known cost today, you avoid an enormous possible cost in the future. Life insurance fills a similar role. As with all insurance, of course, we hope you never have to use it. But having it in place is the responsible thing to do – like having seatbelts and airbags, or childproofing your home.

My spouse and I don’t like to talk about this stuff!

Money is a common cause of stress and friction in marriages. Know that it’s normal! And you want to find a way to talk about it anyway.
On top of that, we humans don’t like thinking about our own mortality or possible disaster scenarios. Many of us end up avoiding actions like getting our will written and buying life insurance. (Go get your will done if you haven’t!!)

Try to take emotion out of it by focusing on the numbers and the financial risk. Hopefully, this article can help.

Conclusion

Think through what it would take to replace all the unpaid work you do for your family.

Be sure you’re talking regularly with your spouse about money and finances. One piece of that conversation should be disaster preparedness. Just like you stock up on food and supplies before a storm, know what you have in place in case disaster should strike. As you talk about the potential bad scenarios, include “what if one of us passes away?”

Money is not an end in itself. It is a tool that enables us to meet our needs and build the lives we want to live for ourselves and our families. If suddenly you were no longer here, wouldn’t you want choices, options, and flexibility for your family?

Stephanie McCullough

Founder & Financial Planner

Our focus is working with women 45+ who are facing a financial future on their own and are looking for a true partner in money decision-making. I help professional women reduce financial stress by aligning their money story with their deepest-held values. I am a non-judgmental financial advisor. My team and I work hard to create a safe space to have the intimate conversations necessary. Since money touches all the most important parts of our lives, we have to talk about it all before we can decide what you should do with your dollars.