Traditional portfolios built for a decades-long accumulation journey do not fit the realities faced by investors who are approaching, or already drawing, retirement income. Large drawdowns and persistent volatility occur often enough to erase years of savings. Once paid work stops, there is no fresh salary to rebuild capital and the sequencing risk of suffering a heavy loss early in retirement becomes acute. Investors in this stage therefore need an investment design that starts with risk control, not with a growth target. 

Why the SMILE risks matter 

Among the five SMILE threats – sequencing, market, inflation, longevity and emotion – sequencing and emotion rise to the top once salary contributions end. A sharp fall early in retirement forces investors either to withdraw less than planned or to deplete capital faster than expected.