Are You Prepared for a “Lost Decade” in Retirement?

As you approach retirement, one of the biggest concerns is market volatility.

And understandably so—no one likes seeing their investments decline.

The reality, however, is that market downturns and recessions are a normal part of investing. Because of this, your financial plan should be built with these periods in mind—especially when planning your retirement income and spending strategy.

But what happens if markets struggle not just for a year… but for an entire decade?

The Reality of a “Lost Decade”

History has shown that extended periods of weak market returns can occur.

In fact, the 2000s are often referred to as the “lost decade” for US stocks.

10-Year Returns (2000–2009):

US Stocks: -3.8%
Canadian Stocks: +5.6%
International Stocks: -1.6%

Canadian Bonds: +6.8%
Aggressive Portfolio: +1.9%
Moderate Portfolio: +2.9%
Conservative Portfolio: +5.2%

Source: 2026 The Big Picture, BMO Global Asset Management

This period included several major events:

• The Dot-Com crash (2000–2002)
• The September 11 attacks (2001)
• The Global Financial Crisis (2007–2008)

Despite these challenges, diversified portfolios were still able to produce modest positive returns.

Looking at the Bigger Picture

While the 2000s provide a powerful example, it’s important to recognize that this was not an isolated experience.

If we step back and examine market returns by decade going all the way back to the 1940s, we can see that periods of both strong and weak returns are a normal and recurring part of long-term investing.

Source: BMO Global Asset Management. For illustrative purposes only.

The key takeaway is simple: while no one can predict which decade will underperform, history shows that markets move in cycles—and a well-diversified portfolio helps manage that uncertainty.

This is why retirement planning isn’t about predicting the next decade—it’s about preparing for whatever it may bring.

What Can You Do About It?

If you’re retired or getting close – the key is preparation, not prediction.

Here are several practical strategies to help protect your retirement income during challenging market periods.

Your Withdrawal Rate

How much you take from your portfolio each year plays a critical role in long-term sustainability. Reviewing historical data and running projections can help determine whether your current income plan is realistic over a full retirement.

Flexibility

One of the most effective tools you have during market downturns is flexibility. Consider separating your expenses into core expenses, such as housing and insurance, and adaptive expenses, such as travel or major purchases. Being able to temporarily reduce discretionary spending can help preserve your portfolio.

Risk Management Tool

Diversification remains one of the most important risk-management tools. A well-structured retirement portfolio typically includes Canadian, US and international equities, along with Canadian and global fixed income. This helps reduce reliance on any one market or region.

Bucket Approach

A bucket approach can provide both structure and peace of mind. You can divide your portfolio into short-term (1–5 years of spending), medium-term (6–10 years), and long-term growth investments. This allows your long-term investments time to recover during downturns, reducing the risk of selling at the wrong time.

Guaranteed Income

For some retirees, adding guaranteed income can reduce financial stress. Annuities can provide predictable lifetime income and protection from market fluctuations. In my experience, retirees with more guaranteed income often feel more secure regardless of market conditions.

Over time, your portfolio can drift away from its intended allocation. Rebalancing helps maintain your target risk level, keeps your strategy aligned, and reinforces disciplined investing.

Having a line of credit in place can act as a financial safety net. In a downturn, it may allow you to cover large expenses without selling investments at unfavourable prices—giving your portfolio time to recover.

A retirement plan should evolve over time. Annual Strategy sessions allow you to stress test your plan, adjust for market changes, and make small changes early to avoid larger issues later.

Final Thoughts

Will we experience another “lost decade” like the 2000s?

No one knows for certain.

What we do know is that over a 30–40-year retirement, you will experience multiple market downturns. That’s why the goal isn’t to avoid volatility – but to build a plan that can withstand it.

With the right structure in place, even challenging markets can be managed with clarity and confidence.  Retirement planning is not a one time event, it is an ongoing process that requires you to adjust and adapt over time. 

Have Questions?

If anything above isn’t clear—or if you’d like to talk through any of it—let’s set up a quick call or virtual meeting. 

Book time with us HERE

Looking forward to helping you stay on track. Best Regards, Jack Lumden, MBA, CFP® Financial Advisor, CI Assante Financial Management Ltd.

Jack Lumsden, MBA, CFP®, is a financial advisor at CI Assante Wealth Management Ltd. with over twenty-five years of experience. He focuses on helping those transitioning from their working years to retirement, creating lifelong income and cash-flow strategies from accumulated financial assets.

A Burlington resident, Jack enjoys staying active and coaching high school football. He values family time – attending sports events with his son, Connor, and country music concerts with his daughter, Paige. He and his wife Sandi, also love to travel. Jack holds a BBA from Wilfrid Laurier University and an MBA from McMaster University, and he is a CERTIFIED FINANCIAL PLANNER® professional.