Recalculating Risk Tolerance

Navigating Decumulation In An Uneasy Market

How to manage risk while strategically drawing down client assets

by Heather Kelly

Ms. Kelly is executive vice-president for Allianz Life Financial Services LLC. Visit

Preparing for retirement has perhaps never been more complex. We have gone from a bull run in the market and historically low interest rates to deep worries about persistent inflation, extreme volatility, and a bear market in just the last couple of years.

Not only are Americans having to develop financial strategies and income streams that need to last for potentially decades in retirement, but inflation and market tumult has left people on the verge of retirement increasingly uneasy.

According to a recent Allianz Life* study, 75% of Americans say they are worried the rising cost of living will affect their retirement plans, while 62% worry that a major recession is right around the corner. It is a stressful time when people begin thinking about spending down their hard-earned savings for retirement, and this is further compounded when these other economic uncertainties come into play.

What we’re seeing is that people tend to have emotional reactions in these cases. After all, we are only human. Faced with big decisions and emotions around finances, people either decide to chase returns to make up for some of the losses they have weathered in the stock market, or they run away from risk and simply keep their cash on the sidelines. In fact, 71% of Americans say they are keeping some money out of the market to protect it from loss – a number that has been steadily increasing over the past year.

But it is during these challenging times that your role as a financial professional can show the most value.

Master The Conversation

People save all their lives for retirement, and when major risks – like historic inflation or ongoing market volatility – threaten to derail even the best-laid strategies, emotions can run high. When clients receive guidance on how to navigate risks, it’s important to first listen to their worries. Really take the time to hear them, and then deliver tailored advice with a personal and empathetic touch – particularly in emotionally charged times.

Also, being prepared is a key to being calm. Stating the obvious, the more prepared you are, the less room there is for error. It can also portray a sense of confidence and authenticity, which can be so important when meeting with a client amidst unprecedented economic times.

All of these communication skills will come in handy when difficult conversations need to happen and the more comfortable you may feel when discussing potentially difficult or emotional topics. Whether that means delaying retirement for a few years, or making trade-offs from what your clients thought their dream retirement might look like, financial advisers can play an important and steadfast role in providing trusted guidance.

Getting To Tactics

Not only are Americans having to develop financial strategies and income streams that need to last for potentially decades in retirement, but inflation and market tumult has left people on the verge of retirement increasingly uneasy

Some of the most important conversations that financial advisers are having with clients right now surround the strategic draw down of retirement assets to cover core critical expenses. But, because we are in unique times, advisers are diversifying and thinking differently about their offerings to meet some of the exceptional risks that clients are facing today – particularly with new product offerings aligned to the adviser business model.

Many want to add insurance or investment products into the portfolio that extend a level of protection from market downturns.

Annuities offering guaranteed retirement income that clients can’t outlive are uniquely positioned and can help address these worries around volatility. Some annuities even offer the opportunity for income increases throughout retirement through riders that may either be built in to the contract or optional and available for an additional rider fee, which can help calm fears and help keep pace with inflation.

In fact, the vast majority (78%) of Americans said having a guaranteed lifetime income option (such as an annuity) as part of their retirement strategy could help address concerns about inflation.

Also, there are other products that can help toggle a client’s risk exposure in this unique economic environment. These include offerings such as buffered outcome products. These can offer clients the opportunity to participate in the growth potential of equities while also providing the opportunity to address downside exposure and volatility.

Taking The Next Step

While few could have predicted the economic environment we find ourselves in at the end of 2022, the good news is that financial advisers have the skills and resources at the ready to help provide clients with a sense of calm and a strategy to help address some of these key risks to retirement security.


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*Allianz Life conducted an online survey, the 2022 Q3 Quarterly Market Perceptions Study in September 2022 with a nationally representative sample of 1,004 Respondents age 18+.
[1] Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.