The 60/40 Portfolio Wasn’t Built for This

ETHAN LOHR, CFP® | April 2026

The balanced stock and bond portfolio took some hits once again.

For years, it's been the default solution for retirees—a portfolio designed to provide growth from stocks and stability from bonds, working together to support income in retirement.

 But in moments like what we've experienced the past moth, that promise began to feel a little less certain.

Markets had been jolted awake. Conflict in the Middle East and rising oil prices brought inflation back into focus, reminding investors that it had never fully left. At the same time, the Federal Reserve appeared to have its hands tied. The rate cuts many were counting on in 2026 did not arrive at all.

The result was a frustrating combination. Stocks drifted lower as markets braced for the economic impact of higher energy costs, while bonds fell as interest rates adjusted upward. What was supposed to act as a stabilizer began to feel anything but.

For retirees, the experience was unsettling. The portfolio that once felt like a life vest now resembled something closer to trying to float with half a pool noodle—you were still sinking, just slower.

How Have Retirees Responded?

Some try to get tactical. They lean into what appears to be working—adding energy exposure, shifting toward inflation-protected securities, repositioning the portfolio to match the current moment. And to be fair, this approach can work. But it comes with a condition: you have to be right. Venturing into this territory is a slippery slope that can have a wide range of outcomes.

 Others prefer to stay put. This has been their playbook for decades—don’t overreact, trust the long-term plan, ride out the storm. And during the accumulation years, that discipline was often rewarded.

 But retirement changes the equation. When your portfolio becomes your paycheck, simply “waiting it out” begins to feel different. The stakes are no longer abstract. They are tied directly to how—and whether—you choose to spend.

 And then there are those who step away altogether. They move to the sidelines, waiting for clarity, for stability, for the moment when things feel safe again. The problem is that markets rarely offer that kind of invitation. By the time it feels right to get back in, the recovery is often already underway and the opportunity has passed.

What About Bonds Going Forward?

Unfortunately, this dynamic—where stocks and bonds struggle at the same time—is unlikely to simply disappear. We’re operating in a different environment today. Interest rates are no longer anchored near zero. Inflation remains a real consideration.

And the balance of risks may now lean more toward rates moving higher than lower over time. That matters for one key reason: when interest rates rise, bond prices fall.

Which means the part of the portfolio that’s supposed to provide stability doesn’t always behave that way in real time.

Our Different Approach

The solution has less to do with making the right portfolio move and more to do with a wholesale shift in approach.

For most of life, the goal is to build savings. In retirement, the goal is to use them.

But many never make that shift. They keep using a strategy built for accumulation—reaching retirement—and expect it to deliver income with confidence. And when markets get shaky, rattling both stocks and bonds, that approach starts to break down.

It’s like trying to keep food fresh in the refrigerator during a power outage.

You do what you can. Keep the door closed. Only take what you need and hope the lights come back on soon. If the situation lasts longer than expected, you start tossing things out and making space in the freezer. It’s a torturous game you play while you hear the hum of your neighbor’s generator next door.

Let me suggest a different approach. It won’t eliminate market storms, but it can help you weather them better. It starts with a shift in focus away from growth, performance, and account balances and toward something far more practical: the income that shows up each month to fund your life. Where those big numbers instead become a smaller number in the form of a consistent paycheck.

This doesn’t mean we stop investing. It simply means the focus changes to what matters most in your day-to-day financial life: your income.

So, if that becomes the priority, the next question is simple: Where do you find it?

This is where we start to see things a little differently. Most people look to bonds, dividend stocks, or real estate. And while those can help, they still come with moving parts—interest rates, markets, tenants, timing. They’re not designed to simply show up every month without question. And in retirement, that’s really what you’re after.

Instead, it’s tools specifically built to generate lifetime income.

Because again, the goal isn’t simply to protect your savings when markets are scary. It’s to spend and enjoy them in a way that’s sustainable regardless of what’s happening in the market.

That’s where we believe annuities should enter the conversation. At their core they're guaranteed income tools designed for the phase of life where your portfolio is no longer a scoreboard, but a source of cash flow.

Used thoughtfully, they can help turn a portion of your savings into something far more predictable: a paycheck that continues, regardless of what markets are doing. Much like a generator kicking on during a power outage, they can provide a steady flow of income that keeps life running when markets become unreliable.

They come in different forms, with different features and structures. But for retirees, what matters most is the income they provide. Nothing fancy—but effective.

And yet, incorporating an annuity into your retirement income plan doesn’t automatically mean accepting a lower return over time.

Between well-researched back testing1 and nearly 15 years of applying this framework in real client situations, we’ve found this approach isn’t simply reserved for those with a lower risk tolerance.

But pulling return data or presenting a bunch of graphs and charts isn’t the point of this piece. That’s something we do as part of our retirement planning process using our Four Buckets framework.

The point is simpler than that. Retirement isn’t just a continuation of the strategy that got you here; it’s a different phase of life that calls for a different approach, with different priorities and different tools.

The shift isn’t about chasing a better return. It’s about building a system that gives you the confidence to actually use what you’ve saved. Because at some point, the goal has to change—from growing your money to living on it.

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