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Retiring in a Down Market? Don’t Panic

Market volatility makes most investors nervous, but a big downturn can be especially disturbing to those who are approaching retirement or newly retired. If you’re in that position, it may help to keep these ideas in mind.



Retirement Is Long

During your working career, you may look at retirement as the end of the investment process, but your retirement could last 20 or 30 years or more. So even if the stock market is at rock bottom on the day you retire, your investments may have many years to pursue growth as the market recovers.

You might shift to a more conservative allocation as you near retirement, but you cannot be too conservative if you want to keep up with inflation. Whatever balance you choose, the equity portion of your portfolio can pursue market growth throughout retirement while bonds or similar investments provide income. In both cases, time is on your side.

Don’t Stop Investing

Although a down market may be discouraging, it could be an opportunity to build your portfolio at discount prices. If you are contributing regularly to a workplace plan, IRA, or other investment account, you are practicing dollar-cost averaging. This may help smooth the effects of volatility and enable you to buy more shares when prices are down, putting your portfolio in a stronger position to grow when the market recovers. Reinvesting any dividends, capital gains, and interest income may also add shares to your portfolio at lower cost.

Sell Smart

The greatest challenge of retiring in a down market is that you may have to sell some investments at significantly reduced values, possibly at a loss. If you have been investing for many years, your investments might show substantial gains even with the downturn, but psychologically it’s still difficult to sell them for less than their value when the market was up.

Keep in mind that stock market losses remain on paper until you sell. If you don’t need money from your investments in the near term, you could wait for the market to recover before withdrawing funds. The SECURE 2.0 Act of 2022 raised the required minimum distribution (RMD) starting age for traditional IRAs and most workplace retirement plans to 73, beginning in 2023 (for individuals who reach age 72 after December 31, 2022). The age will rise again in 2033 to 75. You generally can avoid taking RMDs from a workplace plan as long as you are still working for the company sponsoring the plan. Original Roth IRA owners are not subject to RMDs.


Bulls and Bears

Since 1970, there have been seven S&P 500 bear markets — defined as a loss of 20% or more from a recent high — and seven bull markets, a gain of 20% or more from the bear market low. Bull markets typically last longer than bears, and the gains during a bull market tend to be significantly higher than the losses during a bear market.

Timeline of S&P 500 bull and bear markets since 1970

Average duration of bull markets since 1970 has been 2,288 days with an average market gain of 232.3%. The average bear market over the same time period was 472 days with an average market loss of 41.4%. Does not include bear market that began on 1/3/22. Bull market dates: 5/26/70 to 1/10/73; 10/3/74 to 11/27/80; 8/12/82 to 8/24/87; 12/4/87 to 3/23/2000; 10/9/02 to 10/8/07; 3/9/09 to 2/18/20; and 3/23/20 to 1/2/22. Bear market dates: 1/11/73 to 10/2/74; 11/28/80 to 8/11/82; 8/25/87 to 12/3/87; 3/24/2000 to 10/8/02; 10/9/07 to 3/8/09; and 2/19/20 to 3/22/20.

Source: Yardeni Research, October 28, 2022. The S&P 500 is an unmanaged group of securities that is considered to be representative of the U.S. stock market in general. The performance of an unmanaged index is not indicative of the performance of any specific investment. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results. Actual results will vary.


If you do need money from your savings and investments, it might be better to spend down cash first, and then access funds from fixed-income investments, giving equities more time to recover. Deciding what and when to sell can be complicated, and you may benefit from professional advice. Although there is no assurance that working with a financial professional will improve investment results, a professional can evaluate your objectives and available resources and help you consider appropriate long-term financial strategies.

All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. Dollar-cost averaging also does not ensure a profit or prevent a loss. Such plans involve continuous investments in securities regardless of fluctuating prices, so you should consider your financial ability to continue making purchases during periods of low and high price levels.