The Benchmark That Matters Most in Retirement
By Todd Stankiewicz | CIO, SYKON Capital | Portfolio Manager, Free Markets ETF (FMKT)
There is a question I have heard more often lately in planning conversations, especially when markets have been strong.
"Why aren't we just trying to beat the S&P 500?"
Sometimes it is asked directly. Sometimes it shows up in a different form.
"The market has done so well. Shouldn't we be taking more risk?"
"Why not just own the S&P 500 and leave it alone?"
"If the market averages around [some arbitrary percentage] over time, why would we ever do anything different?"
These are fair questions. They are also understandable questions. But if we stop there, we may be measuring the wrong thing.
The S&P 500 can be a useful benchmark. It just may not be the benchmark that tells you whether your financial life is actually working.
That distinction took me years to fully appreciate. Earlier in my career, I probably would have answered the question differently than I do today.
Experience has a way of changing the questions you think matter.
When I first entered this profession, I was fascinated by investing. I studied technical analysis, portfolio construction, market history, and economic cycles because I believed that becoming a better investor would naturally make me a better advisor. Investment performance felt like the center of the profession. It was measurable, comparable, and easy to discuss.
Over time, though, something unexpected happened.
The longer I sat across the table from families making real financial decisions, the less those conversations revolved around investments. They revolved around people.
One of the defining periods of my career was the financial crisis. Interestingly, what stayed with me wasn't watching the market decline. I couldn't tell you where the S&P 500 closed on a random day in October of 2008 without looking it up. What I remember are the conversations.
Many of those conversations were with people who were not clients. They had built successful careers, accumulated meaningful wealth, and spent thirty or forty years doing the things they believed responsible people were supposed to do. They worked hard. They saved. They made sacrifices. They built lives around the belief that those choices would eventually buy them freedom.
Then, almost overnight, they were not asking about the market anymore. They were asking whether they could still retire, whether they needed to find another job, or whether they had to change the life they thought they had already earned.
They were asking whether they still had a future they recognized.
Those conversations stayed with me because they taught me something I had never fully appreciated.
People don't experience bear markets as percentages.
They experience them as life decisions.
I didn't fully understand it at the time, but looking back, that's when my definition of success began to change.
The longer I do this work, the less interested I become in trying to maximize returns for their own sake and the more interested I become in trying to maximize the probability that families get to live the lives they imagined.
Over the next two decades I watched the same pattern repeat itself. Different clients. Different market cycles. Different economic environments. Yet the conversations that mattered most were remarkably consistent. Very few people ultimately cared about outperforming an index if the life they had worked so hard to build was still intact. What they cared about was preserving the ability to make choices.
I remember one client in particular.
They had accumulated roughly $4 million over a lifetime of disciplined work and investing. Retirement was no longer a distant goal. It was sitting right in front of them. They had reached the point where work had become optional, yet they couldn't quite bring themselves to walk away.
Like many investors, they started by asking about the market.
"Is now a good time to retire?"
"What if the market falls after I leave my job?"
"Should we be taking more risk while markets are strong?"
Those questions are completely understandable. But the question that matters most is often deeper than where the market goes next.
A better question is this:
What is this money supposed to do for your life?
That question tends to slow the conversation down because it moves the focus away from forecasts and toward purpose. Instead of starting with the portfolio, you start with the life the portfolio is supposed to support. You look at retirement income, taxes, Medicare, spending, withdrawal strategies, and how each decision affects the others. The goal is not to maximize returns for the sake of maximizing returns. The goal is to understand how much return the plan actually needs to accomplish the life you want to live.
That is where the investment conversation changes. For many people, the portfolio feels like the starting point. In a true planning conversation, it is one of the last decisions you make.
We begin with the life. What kind of retirement are you trying to create? How much income do you really need? What matters most to you? How much flexibility do you want? What would truly change your life if markets became difficult for a period of time?
Everything else becomes a supporting decision.
Only after those questions are answered does it make sense to build the investment strategy.
Because your portfolio is not your plan. It is one part of your plan, and when we treat portfolio performance as the whole scorecard, we can completely miss whether the financial life is actually working.
One of the reasons I rarely begin planning conversations with investment performance is because I am usually measuring something different. I am trying to understand whether the decisions being made are increasing or decreasing the probability that a family gets to live the life they have envisioned. Performance matters, but only in the context of that larger question.
I have met people with very high incomes whose portfolios looked impressive on paper, but whose financial lives were surprisingly fragile. They earned well, invested well, and still had very little room for error because their spending, taxes, and savings habits were not creating the flexibility their future required.
I have also seen the opposite. Families whose portfolios did not look exceptional next to the S&P 500 became stronger year after year because they saved consistently, managed taxes thoughtfully, kept spending aligned with their goals, and took only the risk their plan actually required.
That is the part most benchmarks miss. The S&P 500 can tell you how one part of your portfolio performed. It cannot tell you whether your financial life is moving in the right direction.
The things that often shape financial outcomes the most are not always the things we can compare on a quarterly statement. They are the decisions repeated over time: how much we save, how much we spend, how we manage taxes, how we prepare for uncertainty, and whether the risk we are taking is actually necessary for the life we are trying to build.
Those are the choices that compound quietly. They do not always feel exciting in the moment, but over time they may determine whether money gives you more choices or fewer of them.
That is an important distinction, and it does not get enough attention today.
Why Retirement Changes the Investment Question
One of the hardest transitions in financial planning is moving from accumulating wealth to relying on that wealth. During your working years, market volatility is uncomfortable, but ongoing income, continued savings, and time can help absorb some of the pressure. In retirement, the same market decline can feel very different because the portfolio may now be supporting your lifestyle.
That changes the question. It is no longer only, “Can this investment recover over time?” It becomes, “Can my plan help me avoid making permanent decisions during a temporary setback?”
For a retiree, risk is not just volatility on a statement. Risk may be selling investments at the wrong time to meet spending needs, delaying a move you were ready to make, helping family less than you intended, or becoming more cautious with your life because the plan no longer feels secure.
That is why retirement decision-making should start with the spending need, income sources, taxes, withdrawal timing, and flexibility built into the plan. The portfolio should then be shaped around those realities, not the other way around.
A good retirement plan does not eliminate uncertainty. No plan can do that. But it can help reduce the chance that uncertainty turns into a decision you did not want to make.
A lot of financial advice is built around generic answers to generic questions. Buy the market. Stay invested. Just keep buying. Those ideas may be entirely appropriate for someone who is thirty years old, earning a paycheck every two weeks, and contributing to retirement for the next three decades.
But financial planning is not generic.
A thirty-year-old software engineer and a sixty-eight-year-old retiree may both own investments, but the job those investments need to do is very different.
The younger investor may be able to use time, future income, and ongoing savings to recover from setbacks. The retiree may need the portfolio to provide income, flexibility, and confidence through those same setbacks.
That is why the S&P 500 can be a useful comparison point, but it should not be the first question.
The first question should be, "What level of return does your plan actually require?"
Because once you know that answer, you can make much better decisions about the amount of risk you actually need to take.
If your financial plan can accomplish everything you want with a return assumption that does not require unnecessary risk, why intentionally expose your life to risks that could permanently change what you are trying to protect?
That is the question worth asking before taking more risk.
One of the questions I find myself asking in planning meetings is surprisingly simple: what are we changing for?
If taking additional investment risk meaningfully improves the probability that you can achieve the life you want, that is worth discussing.
But if the change is being driven by the fact that someone else made more money this year, or because the S&P 500 had another strong run, or because sitting still suddenly feels uncomfortable, then the decision may no longer be a planning decision. It may be an emotional one.
Investments still matter. They deserve thoughtful, disciplined oversight. But the success of a financial life should not be judged only by whether a portfolio beat a benchmark in any particular year.
The better measure is much more personal: is your plan still protecting your ability to choose?
That becomes especially clear when you think about retirement not as a number, but as a conversation.
One version of that conversation is filled with possibility. Maybe it is travel. Maybe it is time with grandchildren. Maybe it is volunteering, starting something new, playing more golf, being more present at home, or simply enjoying a slow Monday morning without wondering what emails are waiting. Work has become a choice, not a necessity.
Now imagine a different conversation. You are wondering whether you need to go back to work, whether you should postpone retirement, whether you need to sell the house you planned to grow old in, or whether the life you spent decades building still fits inside the portfolio that is left.
Both families may have worked hard. Both may have saved diligently. Both may have watched the same market and compared themselves to the same benchmark.
But the difference that mattered most was not who beat an index by another percentage point.
The difference was who had built a plan that protected their ability to choose.
Because the greatest value of money is not simply what it allows you to buy. It is the choices it allows you to keep.
Frequently Asked Questions
Should I compare my portfolio to the S&P 500?
It can be helpful to understand how the S&P 500 is performing, but it should not be the only scorecard for your financial life. A better comparison is whether your portfolio is supporting the job it was designed to do, such as funding retirement income, managing risk, creating tax flexibility, and preserving the choices that matter most to you.
Why is the S&P 500 not always the right benchmark for retirement?
The S&P 500 reflects the performance of large U.S. companies. It does not show whether your retirement income is sustainable, whether your spending is manageable, whether your taxes are being coordinated, or whether your plan can handle a difficult market without forcing decisions you did not want to make.
How do I know how much investment risk I need?
The right amount of risk depends on what your financial plan requires, not only on what the market has recently done. If your goals can be met with a more balanced approach, taking more risk may not improve your life in a meaningful way. The question is whether the additional risk improves the probability of achieving what matters most.
What should a retirement portfolio actually be designed to do?
A retirement portfolio should support the life you are trying to fund. That may include creating income, managing volatility, preserving purchasing power, maintaining liquidity, coordinating with tax planning, and helping you avoid choices that could permanently reduce your flexibility.
What is the difference between financial planning and investment management?
Investment management focuses on how assets are allocated and managed. Financial planning looks at the broader picture, including cash flow, taxes, retirement income, estate considerations, insurance, spending, and the personal decisions your money is meant to support.
What question should I ask before changing my investment strategy?
A helpful question is, “What are we changing for?” If a change improves the probability that your plan works, it may be worth considering. If the change is mostly driven by comparison, fear of missing out, or short-term market performance, it may be worth slowing down before acting.
About the Author
Todd Stankiewicz | Chief Investment Officer, SYKON Capital
Todd Stankiewicz is the Chief Investment Officer of SYKON Capital, a fee-based registered investment advisor with offices in Westchester County, NY and Jupiter, FL. He is a recurring guest on Fox Business and the Schwab Network, where he discusses markets, portfolio strategy, and investor behavior.
Learn more at www.sykoncapital.com
Advisory services are offered through SYKON Capital LLC, a registered investment advisor with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable as of the date of this report. Past performance is not indicative of future returns, and diversification neither assures a profit nor guarantees against loss in a declining market. Investments involve risk and are not guaranteed.
