Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.

The moment right before someone pulls the trigger

By the time a client is ready to retire, most of the hard work is already done.
The pension option is chosen. The savings are in place. We have mapped out the income, the taxes, the healthcare bridge to Medicare.

And then, right before retirement, the same thing happens almost every time.

They pause.

Then comes the question, usually some version of the same one.

What if I do this, and the market drops the week after?

Take Cheryl. She is a hypothetical county employee in her late 50s with about 30 years in PERS 2. She has done everything right. Saved steadily. Lived within her means.

She is not scared of running out of money someday. She is scared of starting at the wrong moment.

What the history actually says about timing

So let me tell you what the research shows.
Peter Lynch, who ran Fidelity's Magellan fund for years, once looked at what would happen to an investor with almost comically bad luck.

Imagine you invested money every year for 30 years, from 1965 to 1995, but you always bought on the single worst day of the year. The very top, every time.

You would have earned about 10.6 percent a year.1

Now imagine the opposite. Perfect timing, buying at the lowest point every single year. Your return would have been about 11.7 percent a year.

Thirty years of the worst luck imaginable trailed thirty years of flawless timing by roughly one percentage point.
The thing people lose the most sleep over turned out to matter far less than simply staying in the market.

Why retirement changes the math

Here is where I have to be honest, though.

That study is about someone still working and adding money for decades. Time was on their side.

When you are retired and pulling income out, you do not have 15 years to wait for a bad market to recover. The order your returns show up in starts to matter. A steep drop in your first few years, while you are selling to pay bills, can do lasting damage.

So the goal is not to time the market perfectly. Nobody can.

The goal is to never be forced to sell at the bottom.

And that is exactly where being a Washington public employee gives you an advantage most people never have.

What your pension really does

Cheryl's PERS 2 pension pays her a guaranteed monthly benefit for the rest of her life. It is not tied to how the stock market performs.2

Read that again, because it is the whole point.

Her paycheck in retirement does not care what the market did last week. It shows up the same in a boom and in a crash.

When your core bills, the mortgage, the groceries, the utilities, are covered by a check that arrives no matter what, a falling market becomes something you can watch and wait out instead of react to. You are not a forced seller.

That is a very different position than a private-sector saver whose entire retirement income depends on their portfolio. When the market drops 30 percent, they may have to sell investments at a loss just to cover the month. You do not have to sell anything.

The war chest that fills the gap

Of course, the pension rarely covers every dollar, especially in the early years before Social Security starts.

That gap is what actually worries people. And it is fixable.

For the money Cheryl will spend over the next several years, we do not leave it exposed to stocks. We hold it in what I call a war chest, roughly five years of planned withdrawals kept in high-quality, short-term bonds.

When stocks fall, she spends from the war chest and leaves her stock investments alone to recover. When markets settle, we refill the bucket.

There is a quiet bonus here too. Holding both stocks and bonds means that when stocks drop, we can rebalance, trimming the bonds that held up and buying stocks while they are cheap. It feels backward in the moment. It is one of the most powerful things a disciplined investor can do.

The pension is the floor. The war chest is the buffer. Together they are why Cheryl can leave her stocks alone long enough for time to do its work.

A few measured next steps

So the fear that keeps people up at night, the fear of one bad day, is mostly the wrong thing to worry about.

The better question is not “what if I pick the wrong moment?”

It is “what am I forced to sell when the market drops?” For a Washington public employee who plans ahead, the honest answer can be nothing.

If you are somewhere near where Cheryl is, start here.

Map your expenses into two buckets: what your pension will cover, and what your portfolio needs to handle.

Then make sure the money you will spend in the next several years is not sitting in the stock market.

And remember this is one piece of a larger plan. When you claim Social Security, how you sequence withdrawals, and how you handle taxes all work alongside the pension. But it starts with knowing your floor.

Get that right, and the next market drop becomes something you read about, not something you fear.

​Sources
1. PBS Frontline. "Betting on the Market: Interview with Peter Lynch." https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/lynch.html
2. Washington State Department of Retirement Systems. "Choosing Plan 2 or Plan 3." https://www.drs.wa.gov/choice/

Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.

The client who kept saying “one more year”

Ron showed up to our call last fall with a spreadsheet he’d clearly been staring at for months.
He’s 57. Public works supervisor for his county, nearly 30 years in PERS 2. Between his pension, his DCP balance, and what he and his wife have saved, the numbers worked. We ran them again. They worked again.

Then he said the thing I hear more than almost anything else.

“Let’s just give it one more year.”

I asked him why. Markets felt shaky. Maybe a little more cushion. You know how it is.

But I’d heard him say “one more year” the year before. And the year before that.

At some point it stops being a financial decision. (He knew it too. He just hadn’t said it out loud yet.)

When the math is done arguing with you

Here’s what I’ve come to believe after working with public employees who are this close to the door.

If you’ve got a pension coming, a DCP balance, and money in the bank, and the plan still checks out, no new number is going to set you free.

A behavioral finance researcher named Daniel Crosby puts it bluntly. He says if you handed someone like Ron a crystal ball that guaranteed he’d be financially secure for the rest of his life, most people in his shoes still wouldn’t retire tomorrow.

Sit with that for a second.

If certainty isn’t the thing holding you back, then the problem was never the money. And no spreadsheet I build is going to fix a problem that isn’t on the spreadsheet.

The two questions I started asking instead

So now, when a client is clearly ready on paper but stuck in real life, I stop running projections for a minute. I borrow two questions from Crosby’s work.

The first: if you knew for certain you’d be fine, would you walk away tomorrow?

When the honest answer is no, that tells us something. There’s something work is giving you that doesn’t show up on a balance sheet.

The second: what is that something?

For a lot of folks, especially the ones who’ve spent decades inside one agency, work is where the people are. It’s the team. The problem to solve. The quiet pride of being good at something. Take that away on a Friday with nothing waiting on Monday, and the pension doesn’t help much.

Crosby points out that men in particular tend to walk into retirement without much of a social life outside the job. I see it constantly. The financial plan is airtight and the life plan is blank.

It doesn’t have to be a light switch

One thing that’s helped my clients more than any withdrawal strategy is realizing retirement isn’t on or off.

You don’t have to grind full-time until a Friday and then do nothing forever.

Some of the happiest retired public employees I work with eased out of it. They went part-time first. Picked up some consulting. Kept one foot in the thing that gave them purpose while finally making room for the rest of their life.

That middle path has a financial bonus too. Every year you hold off tapping your DCP or your personal savings is a year that money keeps working. Your pension gives you a foundation most private-sector folks would envy, which means you have more freedom to design a slow exit, not less.

What actually fills the gap

Crosby talks about five things the happiest retirees tend to have lined up before they leave. I think about them with clients now almost as much as I think about Roth conversions.

Fun and leisure, the part everybody plans for. The social side, which most people don’t. Some kind of deep, absorbing work, paid or not, that makes you lose track of time. Something bigger than yourself, like volunteering or faith or community. And a reason to keep growing instead of coasting.

Money really only buys the first one. The other four you have to go get on your own.
That’s usually the part nobody warned them about.

Where the planning actually comes in

I’m a CPA, so I won’t pretend the numbers don’t matter. They do, and there’s real work to do before you leave.

You have a pension option to lock in, and that survivor decision is permanent. You have a healthcare gap to bridge from your late 50s to Medicare at 65, and the PEBB rules deserve a careful look before you assume anything. You have Social Security timing to coordinate with everything else, and that one tends to reward patience more than people expect.

That’s where I earn my keep. That’s the part I can build for you.

But I’ve stopped pretending it’s the whole picture.

A few honest next steps

If you’re the one saying “one more year,” try Crosby’s first question this week. If certainty wouldn’t change your answer, the thing in front of you isn’t financial.

Start sketching the life side while you’re still working. Who you’ll see. What you’ll build. What’s going to get you out of bed on a Tuesday in February.

And let’s lock down the financial pieces so they can’t be the excuse: the pension election, the PEBB-to-Medicare bridge, the income plan that pulls from the right account at the right time.
Ron and I are still working on his. The numbers were never really the holdup, and once he admitted that, the planning got a lot more useful.

​The plan on paper matters. I’ll always make sure yours is solid. But the retirement you actually want to live is a separate project, and it starts with being honest about what’s really keeping you at your desk.

Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.

Dale comes to our first video call with his statements already pulled up on his screen.
He's a facilities manager for the county. Twenty-six years in, PERS 2, hoping to retire at fifty-eight.

He's done the hard part. He saved steadily in his DCP. The money is there.

So we start going through what he actually owns. Almost all of it sits in funds from one big, famous fund company. The kind of name you'd recognize from a commercial or a stadium.

I ask him why those funds.

He pauses. “I'm not sure,” he says. “They're a name I trust. I've seen them around forever.”

I hear some version of that more often than you'd think. And it makes complete sense. We're wired to reach for what feels familiar.

But familiar and better are not the same thing. And the space between them can quietly cost you.

What the research actually found

There's a simple experiment that shows this better than anything I can say.

Researchers handed people two index funds and asked how they'd split their money. Same holdings. Same fee. Line by line, the exact same fund. The only difference was the name on the label, one familiar and one generic.

There's no financial reason to prefer one over the other. The money should land somewhere near 50/50.

It didn't. People put 65% into the familiar name and just 35% into the identical generic version1. They even guessed the unfamiliar fund was more likely to lose money, for what was literally the same investment1.

The name didn't change anything inside the fund. It only changed how people felt about owning it.

Why does that happen? Because familiarity lowers our sense of risk, whether or not the actual risk is any different2. We don't study the unfamiliar fund and decide it's riskier. We feel that it is, and then we look for reasons to back up the feeling.

And before you assume this is a rookie mistake, it isn't. Even advisors managing money for wealthy clients show the same pull toward brand-name choices5. It's human, not amateur.

Why the famous names tend to fall short

Here's the part that surprises people.

When you line up the actively managed funds from the big, famous fund families against the benchmarks they're trying to beat, most of them fall short. One analysis found that 69% of Goldman Sachs active funds lagged their benchmark or didn't survive. Even at Vanguard, a firm practically synonymous with smart investing, 63% of its active funds underperformed1.

The star manager doesn't hold up much better. S&P tracks whether top funds stay on top, and not one of the top-performing U.S. stock funds at the end of 2020 was still in the top group four years later3. Not one.

It gets worse once you realize the lineup you see today is already the highlight reel. The funds that stumbled badly were quietly closed or merged away, and their track records went with them1.

So why do the recognizable names so often trail?

Part of it is just math. Back in 1991, economist William Sharpe showed that after costs, the average actively managed dollar has to underperform the average index dollar by the amount of those costs4. Active and passive together own the whole market, so as a group the active side can't beat it after fees.

Part of it is the business model. A big fund company gets paid for gathering assets, not for beating the market. A fund that grows from one billion to ten billion collects far more in fees whether or not it ever outperforms. And the name is recognizable largely because the firm spent a fortune making it that way. That spending comes out of someone's returns. Usually yours.

This shows up beyond fund companies, too. Even in the “independent” advice world, private equity now controls close to a quarter of the assets under management6, which brings its own pressure on fees and service. None of that makes a firm bad. It just means the name on the door doesn't tell you whose interest comes first.

What to do instead

I don't want to leave you with a pile of discouraging data and no path forward. There's a better way to approach this. It just means trusting a different set of signals.

Start with your pension. Your DRS pension is a stable, lifelong foundation that most private-sector savers will never have. That foundation is exactly what lets the rest of your money take sensible market risk, instead of reaching for whatever feels safest.

From there, own broadly instead of betting narrowly. Almost no one beats the market reliably, and you can't know in advance who will, so own a wide slice of it and let it work.

Then control the things you actually can. As a CPA, this is the piece I push hardest on. You can't dictate next year's return, but you can control what you pay in fees and taxes, and over a long retirement those add up.

And ask better questions, of a fund or of the person recommending it. What does this fund cost? Can you explain why it's in my portfolio without pointing to a famous name or a recent hot streak? Are you a fiduciary, legally required to put my interest first?

A measured next step is simple. Pull up your DCP and any IRA statements and write down what you own and what each piece costs. For every holding, ask whether you can explain why it's there, beyond the name. If you can't, that's worth a conversation, not a panic.

Trusting the right things

The point of all this isn't to stop trusting. Trust matters enormously in investing, because it's what keeps you in your seat when markets get scary. The problem is never that people trust. It's that so many of us trust the wrong things.

So aim it carefully. Trust the weight of the evidence over the comfort of a logo you happen to recognize.
When Dale and I rebuilt his portfolio, nothing about it would impress anyone at a dinner party. There were no names he'd recognize from a stadium. But he could explain every piece of it, and why it was there.

That's the part that actually matters.

​Sources
1. Index Fund Advisors. “The Psychology of the Label: Familiar Names Can Make Poor Investments.” January 20, 2026. https://www.ifa.com/articles/psychology_label_familiar_names_make_poor_investments
2. Weber, E. U., Siebenmorgen, N., & Weber, M. “Communicating Asset Risk: How Name Recognition and the Format of Historic Volatility Information Affect Risk Perception and Investment Decisions.” 2005. https://scispace.com/pdf/communicating-asset-risk-how-name-recognition-and-the-format-2f8flbykyg.pdf
3. S&P Dow Jones Indices. “U.S. Persistence Scorecard.” https://www.spglobal.com/spdji/en/spiva/article/us-persistence-scorecard/
4. Sharpe, William F. “The Arithmetic of Active Management.” 1991. https://web.stanford.edu/~wfsharpe/art/active/active.htm
5. Kostovetsky, L., & Warner, J. B. “Measuring Innovation and Product Differentiation: Evidence from Mutual Funds.” Journal of Finance, 2020. https://onlinelibrary.wiley.com/doi/10.1111/jofi.12853
6. AdvizorPro. “Private Equity Ownership in the RIA Space – 2025 Trends.” September 4, 2025. https://advizorpro.com/post/private-equity-ownership-ria-space
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