--- title: Is It Safe to Retire in a Bear Market? description: Is it safe to retire during a downturn for stocks? If you're planning on retiring in a bear market, make these five financial moves first. authors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2022-06-22T19:50:38.000Z' modified: '2024-05-08T05:51:05.000Z' section: Retirement tags: - News word_count: 1361 canonical: https://money.com/safe-to-retire-in-bear-market/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Illustration of two people on a small boat with a protective shield about to fall down a waterfall](https://img.money.com/2022/06/News-Retirement-During-Bear-Market.jpeg) A bear market can be scary for any investor. But if you are planning to retire anytime soon, a market downturn can be downright terrifying. Stocks [officially entered a bear market](https://money.com/investing-moves-bear-market-stocks/) last week. The [S&P 500](https://money.com/how-to-invest-in-sp500/) is currently down around 21% for the year, and U.S. Treasury yields (which move in the opposite direction of bond prices) recently [hit their highest levels in a decade](https://www.reuters.com/markets/us/yields-hit-decade-highs-before-expected-75-bp-fed-rate-hike-2022-06-14/). The classic portfolio of 60% stocks and 40% bonds is [getting clobbered](https://money.com/60-40-stocks-bonds-investment-portfolio-clobbered/), and, understandably, investors are fearful. Given the current market environment, soon-to-be retirees are likely to be especially stressed about the prospect of living without a regular paycheck. "We're in an uncertain, tumultuous economic period," says Chris Orestis, president of [Retirement Genius,](https://chrisorestisrg.com/) a national retirement information and resource platform. But does that mean you should change your plans? Here's what to consider, as well as some financial moves to help make the transition into retirement as smooth as possible, even in a bear market. ## Should you delay your retirement? If you had your heart set on walking out of those office doors for a final time this year, it can be hard to convince yourself to stick it out for a bit more time. But doing so could really help you financially in the long term, Orestis says. [Inflation is at a 40-year high](https://money.com/may-2022-inflation-eggs-airfare/), as you are probably aware if you've gone [grocery shopping](https://money.com/save-money-on-groceries/) or filled up at the [gas pump](https://money.com/federal-gas-tax-holiday-save-money/) recently. To battle those high costs, the [Federal Reserve is hiking interest rates](https://money.com/fed-rate-hike-investor-advice/), most recently by 0.75% — the biggest increase by the central bank since 1994. While the hope is that upping interest rates will bring down those high prices you're experiencing, there are also constant fears that it could tip the economy into a recession. And the rate hikes have the stock and bonds markets in turmoil as investors assess what the state of the economy means for their portfolios. In short, we're in unpredictable and unsettling financial times that aren't ideal for kicking off retirement. "If it were me and I was going to declare I’m retired and have my retirement party, I'd look to delay it a year or even two if I could," Orestis says. We know that the economy will follow a typical pattern — one in which interest rates go up, demand will cool and inflation will come down — but we just don't know the exact timeline, he adds. ## If you're planning to retire... Of course, not everyone has a choice about when to retire. Pilots, for example, are required to retire at age 65. The good thing is that as long as you plan ahead, there shouldn't be major issues with retiring in a bear market, says ​​Rose Niang, a certified financial planner and director of financial planning at Edelman Financial Engines. Besides, financial planning also means preparing for when things don't go exactly as you thought they would — like when a bear market hits, Niang adds. Here are five financial moves experts say to make when retiring in a bear market. ### Keep cash handy Ideally, you want to wait until after the markets recover before pulling money out of your retirement portfolio. That means you'll probably need enough cash available so you won't feel forced to sell investments while they're at lows. While [market downturns are scary](https://money.com/stock-market-selloff-401k/), "[future returns really improve](https://money.com/bear-market-when-do-stocks-recover/) once stocks are down 20%," Ryan Detrick, chief market strategist at LPL Financial, wrote in a recent blog post. Looking at S&P 500 returns from 1950 until now, Detrick noted that the median gain a year after a bear market starts was around 24%. If you are 12 to 18 months away from retirement now, Niang recommends that you start increasing your cash reserves while the markets are down. One way to do this is to re-evaluate your spending (more on this later) to help you save more. With ample cash on hand, you can delay digging into your [401(k](https://money.com/what-is-a-401k-rollover/)) as soon as you retire. Orestis recommends having two years of your retirement budget in cash. Consider stashing it in a [high-yield savings account](https://money.com/best-high-yield-savings-accounts/) or some other safe, easily accessible account. ### Do not panic sell When markets were booming, investors were willing to spend money on risky assets like [cryptocurrency](https://money.com/what-is-cryptocurrency/) and shares of [companies that weren't even making a profit](https://money.com/stock-market-companies-no-profits/). Now that the market has taken a turn, investors may be tempted to cut their losses and pull that money onto the sidelines, especially if retirement is on the near horizon. "That is what's truly destructive to people's planning: throwing in the towel," says Michael Wagner, co-founder of wealth management firm Omnia Family Wealth. "The challenge there is then getting back in and that's very hard to do." If the [volatile markets have you anxious](https://money.com/investing-moves-volatile-stock-market/), that's understandable. But remember that keeping your money invested now is likely the right move for your long-term plan, since the market's best days [tend to happen right around the market's worst days](https://money.com/keep-money-in-stock-market-why-important/) — and pulling your money out now could mean missing out on the recovery. A J.P. Morgan Asset Management's 2022 "Guide to Retirement" [report](https://am.jpmorgan.com/us/en/asset-management/adv/insights/retirement-insights/guide-to-retirement/) found that between January 1, 2002, and December 31, 2021, seven of the S&P 500's best days occurred within just two weeks of the index's 10 worst days. "Ride this out if you can," Orestis adds. "The only thing worse than missing out on gains in a bull market is locking in your losses in a bear market." ### Check your asset allocation Staying invested doesn't mean ignoring your portfolio. If you're nearing retirement, you want to make sure that your asset allocation — as in, how your portfolio is divided up into different assets — still makes sense. "It's really about checking in on your asset allocation regularly as you get closer to that date and making sure that it's still in line with your time horizon and where you need to be," Wagner says. If that asset allocation is off target, it's time to rebalance, which essentially involves buying or selling various assets to get the weighting back in line with your original plan. For example, if a 60/40 stock-to-bond ratio makes sense for you, then when that ratio gets out of whack and you have 70% in stocks and 30% in bonds, you'll want to rebalance and get back to that original asset allocation. "Sticking to your strategy — if it's a sound strategy based on your goals and based on your risk tolerance — is advice that's not dictated by markets," Niang says. As Christine Benz, Morningstar's director of personal finance, pointed out earlier this year, when you're closing in on retirement "one-size-fits-all recommendations won't cut it." For Morningstar's site, she [outlined steps](https://www.morningstar.com/articles/839520/the-bucket-investors-guide-to-setting-asset-allocation-for-retirement) you can take to determine your retirement asset allocation. ### Re-evaluate your spending Retiring during a bear market will be a little less scary if you can [rein in your spending](https://money.com/social-security-cola-inflation-report/). Orestis recommends tracking your spending for one month — whether it's with [an app](https://money.com/pay-for-budgeting-app-subscription/) or a pen and paper — to see if there are any expenses you can and should cut. "Look at things like streaming and subscription services," Orestis says. "People are carrying so many things that they signed up for and they don't even use or they've forgotten about." If you can, try delaying bigger expenses until markets become a bit more favorable, Niang adds. ### Knock out your debt If you're carrying debt, now is the time to try to pay it off. As the Fed raises interest rates, [rates on credit card debt](https://money.com/fed-interest-rate-hike-june-2022/), for example, increase too. So it's extra important to make sure you're not carrying a balance from month to month. If you *are* carrying a balance, make purchases on your credit card with the lowest annual percentage rate (APR). If you're struggling with debt, look at [debt consolidation options](https://money.com/best-debt-consolidation-loans/), Orestis says. He also advises trying to [negotiate medical debt with a debt collector](https://money.com/how-to-negotiate-with-debt-collectors/) or directly with a hospital or doctors. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/safe-to-retire-in-bear-market/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Retirement Planning", "item": "https://money.com/retirement-planning/" }, { "@type": "ListItem", "position": 4, "name": "Is It Safe to Retire in a Bear Market?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/safe-to-retire-in-bear-market/#webpage", "url": "https://money.com/safe-to-retire-in-bear-market/", "name": "Is It Safe to Retire in a Bear Market?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2022-06-22T19:50:38.000Z", "mainEntity": { "@id": "https://money.com/safe-to-retire-in-bear-market/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/safe-to-retire-in-bear-market/#breadcrumb" }, "dateModified": "2024-05-08T05:51:05.000Z" }, { "@type": "NewsArticle", "headline": "Is It Safe to Retire in a Bear Market?", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2022/06/News-Retirement-During-Bear-Market.jpeg", "width": 2880, "height": 1920, "caption": "News-Retirement-During-Bear-Market" } ], "author": [ { "@type": "Person", "name": "Mallika Mitra", "url": "https://money.com/author/mallika-mitra/", "@id": "https://money.com/author/mallika-mitra/#author", "description": "Mallika Mitra is a contributing editor for Money, based in Chicago. 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