My Account

Retiring in a Bear Market? What to Know

When the market is down, investors are encouraged to keep an eye on the future. But what steps can retirees take to help protect themselves in a bear market?

Close-up of newspaper headlines.

Retiring during a bear market (or any down market) can be unnerving. During the 2008 financial crisis, it wasn’t uncommon for investors to havelost as much as 25% of their 401(k) balance, disrupting their retirement plans.

When financial markets are down, investors are encouraged to be patient, keep their money invested and focus on the long game. But that can be tricky for people who are nearing retirement. There are steps, however, that people retiring in a bear market can take to prepare for potential losses.

Here are five tips for soon-to-be retirees heading into a bear market.

1. Delay Retirement, If Possible

If you’re about to retire, but you can still manage a few more years of work, delaying retirement until the financial downturn rights itself could be a good idea.

Doing so allows you to continue earning an income, and for you to save, growing your retirement savings or investments until the market is able to stabilize itself.

Working for a few more years also shortens your retirement period and could also maximize your Social Security benefits if you work until your full retirement age. Depending on your situation, your health insurance might still be covered by your employer, helping you keep your expenses down even more.

2. Pick Up Contract Work or Consulting Gigs

Freelancing in your field can be a good option to help boost your cash cushion heading into retirement. In fact, freelancing has become even more popular during the pandemic, especially among women, older Americans and people with disabilities.

According to an Upwork survey, 20% or 10 million Americans are now considering freelancing for both its flexibility in how and where they work and its earning opportunities.¹ A great way to get started with freelance work is to network with your past employers and colleagues.

Your Social Security strategy plays an important role in earnings planning. At full retirement age, you have to be careful not to earn more than $4,710 per month. Going over that amount could trigger Social Security payment reductions, higher income taxes—or both.

3. Plan a Better Emergency Fund

In the financial planning world, a widely given recommendation is to have three to six months of living expenses set aside in case of an emergency.

Instead, aim for at least two to three years’ worth of income in liquid assets, such as cash or cash equivalents. That way, you have a buffer to help see you through potential downturns—or financial surprises.

4. Reduce Your Monthly Spending

Many people think that they won’t spend as much in retirement as they did when they were working.²

But a study from the Center for Retirement Research at Boston College found there’s actually a growing trend of retirees spending more in retirement than they did when they were working, whether it’s on trips around the world, growing health care expenses or even helping grown children with student loan debt or on a down payment for a home.

What’s more, inflation is impacting expenses like food and housing, driving prices higher and potentially increasing your spending.

In general, people often don’t have as clear a picture of their spending as they think they do. Carefully tracking your spending for a month can help you see your spending patterns and where you might want to cut back. Review your spending tracker with an eye toward quality of life. Determine which expenditures contribute to your happiness and which may not be worth it.

Budgeting During Uncertain Times

Get tips for keeping your finances in line with your budget during inflation and economic uncertainty.

Also, where might you be able to cut back? For example, can you extend the life of your car, postpone or scale back a vacation or possibly downsize your home to something smaller? Then, you can build a budget, separating your expenses into specific categories and sticking to the spending amount that you allot for each.

5. Stay Disciplined in Investing

In the midst of a bear market, overreacting or making knee-jerk investment decisions can actually backfire and end up hurting you in the long run.

Exactly how you should react when it comes to your investments during a bear market depends on where you are right now in terms of retirement—have you recently retired or are you close to retiring?

As always, staying diversified with your investments is a good way to be well-positioned for future market rebounds. With a diversified portfolio, you’re ready for whichever market segment bounces back first.

When it comes to what to sell during a bear market—if anything—it’s highly dependent on your investment strategy, goals and risk comfort level.

Find Peace of Mind in Retirement

Retiring into a bear market can be a stressful experience. But if you approach it calmly and methodically—and you tap into the above five tips—you’ll have a better chance of weathering the storm and finding yourself in financially solid shape as you head into retirement.

Need Help With Your Retirement Strategy?

A financial consultant can help you assess your unique situation.


The Great Resignation: From Full-Time to Freelance, Upwork. Survey as of July 16, 2021.


Do Retirees Want Constant, Increasing, Or Decreasing Consumption?, Anqi Chen and Alicia H. Munnell, Center for Retirement Research at Boston College.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

Diversification does not assure a profit nor does it protect against loss of principal.