What To Do if You Retire in a Bear Market

The prospect of retiring during a bearish market isn’t a good idea; however, it’s not an end if you’ve worked hard and sacrificed your time in your job to create a retirement nest savings. You can take action to safeguard it if it is a victim of the effects of a bear market.

Even though it might not seem like it, resigning during an economic downturn can provide an opportunity, even if it creates some pain in the near term. Here are some suggestions you can employ to navigate through a bearish market at the beginning of your journey to retirement.


It is not a pleasant feeling to experience the discomfort of a twenty percent or higher decrease in the value of their portfolio; however, even for people who have recently retired, these kinds of selloffs may have positive aspects. In reality, retirees who are 65 years old or older living to 23 years, as per IRS tables. For that lengthy period, the stock market is hugely likely to rebound and move into new heights as it has always done, following bear markets. Although past performance isn’t an indicator of future outcomes for two decades, the market will likely recover.

This is the place where opportunities arise. Recent retirees can make the most of a decline in the market to invest their existing money into the market as it remains at a low. Tax refunds, windfall funds, pensions, or Social Security payments that exceed what you can live on may be redirected to low-value retirement accounts. If you experience a bounce, it will earn you more money than if you had just maintained your account at its current level.

Restrict Withdrawals

Some retirement plans, including IRAs and 401(k) plans, are subject to obligatory minimum withdrawals that are required to take once reaching the age of 72. If you’ve just quit your job and aren’t in that stage, however, there’s nothing that will stop you from withdrawing.

In general, limiting distributions as much as possible during a bearish market is best since you’ll be locking in the losses to your portfolio. If you can survive on some other income during this period, you should avoid selling any security for a failure to cash out the funds.

If you’re older than 72, you are required to make distributions. Try to restrict those withdrawals only to the minimum amount required. In time, you will be able to withdraw more money once the market is recovering from compensating for any deficit you may experience.

Partition Your Short-Term Money

An exception against this “avoid all withdrawals” mantra is that you might have to divide your money and withdraw it for immediate requirements. Although it’s not ideal to be forced to sell your stocks while it’s down on the markets, in certain instances, it’s necessary.

The key here is to limit your withdrawal to the portion essential to your existence. If you can keep most of your portfolio in place, It’s likely to rebound in time, and eventually, it will be adequate to meet your long-term goals.

Rebalancing After the Bear Turns Into a Bull

Investors and retirees generally underestimate how they react to risks within their portfolios. If the bear market at the beginning of retirement caused an alarm in your mind, then perhaps it’s time to reduce your risk factor in your portfolio.

There is no need to eliminate an equity allocation to build your investment portfolio in the next two years you’re likely to enjoy when you retire. But, talk to your financial advisor about the best way to build an appropriate portfolio that gives you the income and growth you require to finance your retirement but can still allow you to rest in the evening when markets are excited.

The Bottom Line

The bear market is a nightmare for anyone who invests. However, retirees, they could make their savings vulnerable. The best method to be prepared for market volatility in retirement is to control the risk your portfolio takes as you approach close to the conclusion of your career.

If you’re already on edge, you can reinvest, limit withdrawals, and divide the money to meet immediate needs will aid in getting through it. Be sure to stay clear of emotionally driven decisions in times of crisis since, time and time, bull markets appear following bear markets.