Most people approaching retirement in Ireland arrive with the same belief: it’s time to play it safe. Take the chips off the table. Move out of equities. Protect what you’ve built.

It sounds sensible. In many cases, it’s what their pension provider has been doing for them automatically since they turned 55. But Ben Carlson — author, director at Ritholtz Wealth Management in the US, and one of the sharpest financial thinkers writing today — has a different view. Risk and reward, he argues, are not opposites. They’re the same thing. You don’t get one without accepting the other. And the moment you try to eliminate risk entirely, you may quietly be eliminating your retirement security along with it.

I had Ben on the Informed Decisions podcast recently, and his book Risk and Reward (published May 2025 by Harriman House) gave us a lot to dig into. What follows are the ideas from that conversation that I think matter most for Irish investors — particularly those five to fifteen years out from retirement, or already in drawdown.

The Yin and Yang of Risk: Why You Can’t Have One Without the Other

Ben’s core argument is almost uncomfortably simple: risk and reward are attached at the hip. If you want your money to grow above the rate of inflation — which you do, because inflation is relentless — you have to be willing to accept volatility. There’s no version of investing where you get the returns without accepting the occasional significant fall.

That applies whether you’re 45 and building a pension, or 65 and drawing from an ARF.

The practical problem is that most people in Ireland carry one of two unhelpful beliefs. Either they’re so scarred by a past market fall — 2008 is the most common reference point — that they can’t bring themselves to stay invested in equities. Or they’ve watched markets recover so quickly and so strongly over the last decade that they’ve forgotten crashes can last years, not weeks.

Ben put it well in our conversation: he wrote the book partly for the person who’s too frightened of risk to take any, and partly for the person who’s started to think investing is easy. Neither is well-served by their current beliefs. The Japan market — which peaked in 1989, fell 80%, and only reached new highs again last year — is his standing reminder that long bad periods do happen, even in developed economies.

The lesson isn’t to avoid markets. It’s to be diversified across them, and to understand the difference between short-term pain and genuine long-term risk.

Three Things That Actually Determine How Much Risk to Take

One of the most useful frameworks Ben shared is one I’ve started using more deliberately with clients here. He describes three distinct dimensions of risk tolerance:

Willingness — how emotionally comfortable you are with volatility. This is the squishy part, as Ben calls it. Someone who worked at a firm that collapsed during the financial crisis may be rationally wealthy enough to take risk, but psychologically unable to. That matters. A strategy you abandon at the worst possible moment is worse than a more conservative strategy you actually stick with.

Need — what your numbers actually require. If your financial plan works at 3% net growth per year, you don’t necessarily need to chase 7%. This is also where human nature creeps in — most people don’t just want “enough”. They want their money to keep growing, perhaps to leave something behind, perhaps because leaving returns on the table feels like waste. Understanding the difference between what you need and what you want is an important conversation.

Ability — your financial circumstances. The size of your fund, other income sources, property, obligations. Someone with a €2m ARF, a full State Pension, and a rental income has a very different ability to absorb a market fall than someone whose ARF is their only asset.

These three aren’t equally weighted, and they don’t always point in the same direction. Ben’s view — and mine — is that willingness often ends up being the deciding factor, not because it should, but because if you’re genuinely unable to hold your portfolio through a 30% fall, you won’t. And that’s when the real damage happens.

The Bucketing Approach: Protecting Spending Without Abandoning Growth

One of the most concrete things we discussed was how to think about drawdown in a way that keeps the growth engine running without leaving you exposed at the wrong time.

The conventional wisdom in Ireland is to lifestyle your pension — gradually de-risk as you approach retirement, so by the time you get there, you’re sitting in something like a 60/40 or even more defensive allocation. The logic is that you can’t afford a big market fall just as you start spending.

That’s a legitimate concern. Sequence-of-returns risk — the danger of a bad market at the start of your drawdown — is real and can have an outsized effect on whether your money lasts.

But here’s the problem: if you’re retiring at 62 and you might live to 90 or 95, you have a 30-year investment horizon ahead of you. Sitting in a heavily defensive portfolio for three decades is not playing it safe. It’s just taking a different kind of risk — the risk that your money doesn’t grow fast enough to keep up with inflation, that you spend it down too quickly, and that you outlive it.

Ben’s framing, which I’ve always found practical, is to think in buckets rather than blended percentages. If 20% of your fund is in cash or short-term bonds, that’s roughly five years of spending at the 4% withdrawal level. Can you sit through a bad market for five years knowing your spending is covered? Most people can. If 40% is in more defensive assets, that’s closer to ten years of coverage. Once you frame it that way, the question becomes emotional as much as mathematical.

The Bill Bengen 4% rule is a useful starting point for Irish investors, but with a significant Irish adaptation: Revenue’s imputed distribution rules already require ARF holders to draw at least 4% per year from age 61 regardless of what markets are doing. That changes the conversation. The key takeaway from Ben’s research is that flexibility is what protects you — spending a little more in good years, a little less in bad ones, and not treating any rule as fixed.

The Japan Lesson: Why Global Diversification Still Matters

Ben spent a significant chapter of his book on Japan — a subject he almost named the entire book after. The Japanese stock market peaked in 1989, fell dramatically, and spent 35 years recovering. For investors who were 100% in Japanese equities during that period, it was genuinely catastrophic.

But here’s the data point that tends to stop people in their tracks: if you had invested in a world equity index in 1989 — when Japan made up 45% of global market capitalisation — you would still have earned approximately 9–10% per year over the subsequent 35 years. Because the rest of the world picked up the slack.

This is the argument for global diversification, and it’s one I find myself making regularly. The US makes up about 65% of global stock market capitalisation today but only 25% of global GDP and 4% of global population. That’s a significant concentration of global wealth in one place.

Diversification doesn’t protect you from bad days or even bad years. It protects you from a bad cycle hitting at exactly the wrong time — which for someone entering retirement is precisely what you’re trying to insure against.

The Only Benchmark That Actually Matters

One final idea from Ben that I think deserves more space in Irish financial conversations: the question of what you’re actually measuring your investment performance against.

Institutional investors spend enormous energy benchmarking against indices and peers. Quarterly performance against the MSCI. Did we beat our peer group this calendar year. None of which has anything to do with whether the fund will still be functioning in 2075.

Individual investors don’t have to play that game. Ben shared a story from Jason Zweig: a retiree in Boca Raton, Florida, was asked by a journalist whether he’d beaten the S&P 500 to build his retirement pot. His answer was: “I don’t know, but I did well enough to end up in Boca. That’s all that matters.”

That’s it. The only benchmark you should care about is whether you’re on track to reach your own financial goals. Not whether you beat the market. Not whether your pension fund outperformed the average Irish pension fund.

Am I on track? That’s the question. Everything else is noise — and there has never been more noise to filter out.

Final Thoughts

The instinct to reduce risk as you approach and enter retirement isn’t wrong. But like most instincts in investing, it becomes dangerous when taken to an extreme without thinking through what you’re actually trying to protect.

You’re not just trying to protect what you have. You’re trying to make sure it lasts 30 years, keeps pace with inflation, and gives you the flexibility to adapt as life changes. That requires staying invested in something with genuine growth potential — not despite the risk, but because of it.

Ben’s book is a genuinely useful read for anyone in or approaching drawdown, particularly if you’ve been assuming that “safe” and “bond-heavy” are the same thing. They’re not always.

I hope this helps.

Paddy Delaney QFA RPA APA

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