Every few months I get a version of the same phone call. Someone is a year or two out from retiring, their pension has done well, and then they see a headline saying global shares have hit another record. Suddenly they are convinced they have missed their window. As if retirement were a flight and the gate has just closed behind them.

I understand it completely. You have spent thirty years building this thing, and now the one number you cannot control looks, to you, like it is at the top of a cliff. So the question comes out sideways: should I just wait a year and see?

I want to take that fear apart properly, because retiring at all-time highs is not the risk most people think it is. There is a genuine risk in here, and it is a serious one. It just is not the level of the index on the day you stop working. And in Ireland there is a specific wrinkle that no American or British commentary on this topic will ever mention.

Records Are Normal, Not a Warning

Let us start with the thing that surprises people the first time they hear it. Records are not rare events. They are what a rising asset does on the way up.

I looked at this in some detail when I wrote about whether to jump out of equities when markets are high, and the figure that stopped me was this one: global equities have spent roughly 30% of trading days at or near an all-time high over the past forty years. Roughly one trading day in three. If a record high were genuinely a warning signal, it would be the least useful warning signal ever devised, because it has been flashing for a third of your working life.

Take the MSCI World Index. It tracks large and medium-sized companies across 23 developed economies, so this is properly global, not just American technology shares. It launched at the end of March 1986 at around 150 points. By the middle of this year it was somewhere around 4,750. That is roughly 31 times its starting value in four decades, and it rose in about 30 of those 40 calendar years. Three years in every four.

It was not a straight line, and I would be doing you a disservice if I pretended otherwise. The dot-com unwind between 2000 and 2002 took the index down by roughly 46%. The global financial crisis was worse: from its October 2007 peak to the March 2009 low, the MSCI World fell by around 57% in dollar terms. Both times it felt like the end of the world, and both times the index set fresh records within a handful of years.

And here is the part that often gets skipped in the commentary. This is not purely an American pattern. Europe has had its own run at records this year. The STOXX Europe 600, covering shares across 17 European countries, has set a series of new highs through 2026. London’s FTSE 100 traded above 10,000 points for the first time in its history on 2 January this year. So if you are an Irish investor holding a globally diversified portfolio, you are not riding one country’s luck. You are riding a few dozen economies at once.

Nobody Reliably Calls the Top. Nobody.

Underneath the worry sits an instinct: surely somebody clever enough could look at all this and tell us when to step out and when to step back in.

Let me tell you about the most famous attempt at exactly that.

On the evening of 5 December 1996, the chairman of the US Federal Reserve, Alan Greenspan, stood up at a dinner in Washington and asked the room how anyone would know when, in his words, irrational exuberance had unduly escalated asset values. Translated out of central banker and into English: share prices look ahead of themselves, and this might end badly.

Markets flinched. Tokyo was open as he spoke and fell around 3%. Germany dropped about 4% the following session, Hong Kong close to 3%, London around 2%. And then, within weeks, the whole thing was shrugged off and prices carried on climbing.

The market Greenspan was worried about did not turn down until March 2000. Three years and three months later. By that point the S&P 500 had roughly doubled from where it stood the night he spoke.

Sit with that for a second. Here was a man with access to more economic data than almost anyone alive, in one of the most powerful financial jobs on the planet, and his warning was three years and about 100% early. If he could not call it, you and I have no chance whatsoever. The honest lesson is not that Greenspan was foolish. It is that market timing, as a discipline, does not work reliably for anybody, no matter how sharp they are or what they have access to.

The One Story That Should Genuinely Give You Pause

Now, before this starts sounding like I am telling you nothing can ever go wrong, let me give you the example that deserves real space, because it is a proper cautionary tale.

Japan. The Nikkei 225 closed at 38,915.87 on 29 December 1989, right at the top of one of the most extraordinary asset bubbles in modern history. It then fell to a closing low of 7,054.98 in March 2009. A fall of about 82% from peak to trough. And it did not reclaim that 1989 high until 22 February 2024. Thirty-four years and two months.

If you had put everything into the Japanese market alone at the very top in 1989, you would, in plain cash terms, have gone nowhere for over three decades. Once you account for inflation, investors from that era are still behind.

But listen carefully to what that story is actually warning you about. It is not a warning about equities. It is a warning about putting everything into one single market. An Irish investor holding a globally diversified fund through 1989 would certainly have felt Japan’s collapse, because Japan was an enormous slice of world indices at the time. But the rest of the developed world kept compounding through the nineties and beyond. Concentration was the danger in that story. Not shares themselves, and certainly not the level of any index on any particular Tuesday.

Why Diversification Gets Written Off, Then Proves Itself Right

There is a very human habit sitting behind most bad investment timing, and it is worth naming, because once you see it you notice it everywhere.

When one part of a portfolio has been dead weight for years, whether that is smaller companies, emerging markets, or anything outside whatever is currently soaring, the pull to abandon it and pile into the winner becomes almost irresistible. It feels like common sense. Rising prices get mistaken for rising value, and a few years of underperformance get mistaken for permanent failure.

The trouble is that this instinct is close to perfectly backwards, and it tends to peak at exactly the wrong moment. Usually right before the parts that had been left for dead start doing the heavy lifting and the previous winners take a breather. Diversification can look for long stretches like it is doing nothing at all, right up until the one year it does everything. And by then the investor who abandoned it has already made the switch.

The late Charlie Munger put the underlying principle better than I could: the first rule of compounding is never to interrupt it unnecessarily. That is really the whole argument in a line. The damage in investing rarely comes from the market. It comes from investors interrupting their own plan at precisely the moment their nerve runs out.

What Actually Matters on Your Retirement Date

So if the level of the market is not the real risk, what is?

This is the bit I would like you to take away. It is what planners call sequence-of-returns risk, and it has nothing at all to do with whether markets are high or low on the day you retire. It is entirely about when a downturn arrives relative to when you start drawing an income.

Here is the cleanest way I can show it.

Example: two retirees, same pot, same average return

Take two fictional retirees. Eoghan and Larry, both 58, both with €1.2m in an ARF, both drawing €48,000 a year for 25 years. Neither of them exists. I made them up. The arithmetic does not care.

Give them the exact same 25 annual returns, in a different order. Eoghan gets three poor years first (−20%, −12%, −6%) and then 22 years at 7%. Larry gets the 22 good years first and the three poor ones at the very end. Both experience an identical average return and an identical 4.4% annualised return over the full period. Both draw exactly €1.2m in total.

The arithmetic below assumes the fund grows for the year and the withdrawal is taken at the end of it. Figures recomputed independently in code.

• Eoghan, with the bad years first, finishes with about €577,000

• Larry, with the same bad years at the end, finishes with about €1.83m

Same pot. Same withdrawals. Same average return. A difference of roughly €1.25m, created entirely by timing. Eoghan’s fund is down to about €661,000 by the end of year three, and every euro he sold at those depressed prices is a euro that never participates in the recovery.

That, and not the record high on the six o’clock news, is what deserves your attention in the two years either side of your retirement date. It is also why we look so closely at how bucket and total-return withdrawal strategies compare before anyone starts drawing.

The Irish Wrinkle: You Cannot Simply Skip a Year

Here is where this becomes a distinctly Irish conversation.

Once you have been 60 or over for a full tax year, which in practice means from the year you turn 61, Revenue requires a minimum withdrawal from your ARF each year whether markets have cooperated or not. It is called an imputed distribution, and it means exactly what it sounds like: if you do not take the money out, Revenue treats you as if you had, and taxes you accordingly.

The rates, set out in the Revenue Pensions Manual Chapter 28, currently work like this:

• 4% a year, while you have not been 70 or over for the whole tax year

• 5% a year, once you have been 70 or over for the whole tax year

• 6% a year where the combined value of your ARFs and vested PRSAs is greater than €2m, regardless of age, and applied to the full value of the fund rather than only the part above €2m

On a €1.2m ARF, that 4% is €48,000 a year of taxable income. Whether you need it. Whether you spend it. Whether the market fell 25% last November.

You do not get to quietly pause that withdrawal during a rough year the way a UK or US retiree drawing entirely at their own discretion might. Which means the buffer conversation matters more here than it does elsewhere. Many of our retiring clients hold somewhere between two and eight years of planned withdrawals in low-volatility assets inside the ARF. Not because we are pessimistic about equities, as our view on what pension lifestyling actually does to your fund makes fairly clear. It is because a mandatory withdrawal in a bad year should come out of the calm part of the portfolio, not out of the part that has just fallen 25%.

These rates and thresholds are subject to change at each Budget. Always confirm the current position at Revenue.ie or with a qualified advisor before acting on any of it.

So Where Does That Leave You?

Trying to time your retirement date around where markets happen to sit is a bit like standing at the edge of a pool all afternoon, testing the water with your toe. The most powerful economist in the world could not call the top with any useful precision, and none of us hold a stronger hand than he did that night.

What you can control is genuinely worth your time. How diversified you are across regions and asset types, so that a repeat of Japan’s lost decades in one market does not sink your whole retirement, and so you are not tempted to abandon the laggards right before they turn. How much sits in low-volatility assets alongside the invested pot, so an early downturn does not force a bad sale. And how clearly your Irish withdrawal obligations are mapped out before you need the income.

The market being at a record high on the day you retire tells you almost nothing.

The strength of your plan for the years either side of that date tells you almost everything.

I hope this helps.

Paddy Delaney QFA RPA APA