Good morning, Retirement Starts Today Community! Welcome to Every Day is Saturday, the newsletter reminding us that in retirement, every day is Saturday (including Thursday mornings).

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Episode Breakdown:

00:00 – Welcome and Introduction
​01:21 – Retirement Headline
​12:37 – Listener Question

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Retirement Headline

"Why Downside-Protection ETFs Don’t Protect Portfolios in the Long Run”

The pitch: Buffered/defined-outcome ETFs promise “limited downside” with “participation” in the upside. The catch is exactly what you’d expect: there’s no free lunch.

How they work (in plain English):

• The fund buys a put (limits losses) and sells a call (funds the put, but caps upside).
• Terms reset annually with a floor (often ~0%) and a cap (often ~6–7% before fees).
• Those floor/cap numbers only truly apply if you buy on day one and hold to the reset date. Buy mid-cycle and you can still drop to the floor with little upside left.

Why the math disappoints over time:

• Over long history, the S&P 500’s positive years often exceed the cap by a lot (average positive year ~18%).
• If you’re capped ~6–7%, you forfeit much of the market’s compounding in many of the good years.
• Meanwhile, fees + frictions add up. Result: long-run return drag vs. a basic 60/40 portfolio.

Behavior & timing risk (the hidden gotcha):

• Prices fluctuate intra-year. If you peek in July and see –3%, the product hasn’t removed anxiety—it may have added it (you expected “can’t go down”).
• The promise only “works” if you don’t look and hold strictly to the term date—a tall order for anxious investors.

If you truly need a 1-year “defined outcome”:

• Treasuries/CDs are simpler, cheaper, and actually guaranteed for that period.
• Many retirees would rather take the sure thing than a complex product that sometimes beats cash-like yields—but often doesn’t.

Our stance (Occam’s Razor Retirement Plan):

• Keep 2–3 years of withdrawals in cash/short-duration bonds (your Retirement Runway).
• Own quality intermediate bonds for mid-term needs; stocks for long-term growth.
• Rebalance a couple times a year.
• Simple ≠ unsophisticated. It’s efficient and repeatable—and it keeps your upside uncapped.

Listener Question

“I received a surprise inherited annuity. Should I send an extra quarterly tax payment so I don’t get penalized?”

Great question. Start with the IRS safe-harbor framework to avoid underpayment penalties:

• Option A: Pay 90% of this year’s total tax, or
• Option B (easier): Pay 100% of last year’s total tax (110% if last year’s AGI > $150,000).

If you satisfy either safe harbor, no penalty, even if you still owe a balance in April.

Cash-flow vs. penalties:
Sending an extra estimate can smooth cash-flow, but it doesn’t change penalty exposure once you’ve hit a safe harbor.

A simpler fix (often better): IRA withholding
If you’re 59½ or older, you can do a small IRA distribution and set withholding very high (custodians often cap it at ~98–99%). Here’s why it’s powerful:

• Withholding is treated as if paid evenly all year, no matter when you do it.
• That means a December IRA-withholding move can clean up an underpayment for the whole year without juggling quarterly deadlines.
• Bonus: Your cash can earn in money markets all year before you settle up.

Watch-outs:

• The inherited annuity could nudge you into a higher tax bracket or trigger IRMAA. Safe harbor protects from penalties—not from the tax bill itself.
• Please pay electronically through your IRS account for a clean paper trail; avoid mailing checks.

Quick recap:

• Hit a safe harbor (100%/110% prior year is the easy button).
• If you’re 59½+, consider a year-end IRA withholding sweep instead of fiddling with estimated coupons.
• Coordinate with your advisor/CPA, especially in years with unusual income.

Resources

• ​Click here to view my YouTube channel, Even Better Retirement
• ​Click here to order my book, Retirement Starts Today: Your non-financial guide to an even better retirement
• Click here to read, Why “Downside Protection” ETFs Don’t Protect Portfolios As Well As A Stock-Bond Mix (In The Long Term) ​
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I need your help...

I will be starting a new segment on my podcast: Retire TO something, not FROM something.

The segment will be brief at the end of the show and will share a fun retirement idea, along with links to learn more. Volunteer work and part-time “fun” jobs will be a common theme.

​Click here to share your ideas!

That's it for our four hundred and fourth installment of "Every Day is Saturday." As always, I read (and usually reply to) every listener email. Got a question? Hit reply—you just might hear your name on the show.

Enjoy your “Saturday,”
​Benjamin Brandt

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