Retiring in a Bad Market: 3 Steps to Stay on Track

What happens when you’ve spent decades saving, planning, and dreaming about retirement, only to watch the market tumble just as you’re ready to step away from work?

It’s frustrating. It’s nerve-wracking. And for many people, it can feel like their entire retirement plan is suddenly in jeopardy.

But here’s the good news: you don’t have to cancel or delay your retirement just because the market is down. You simply need a strategy that works in all markets—not just the good ones.

We may not know if the latest pullback is just temporary noise or the beginning of a longer downturn. But uncertainty doesn’t have to equal inaction. In fact, this is the perfect moment to shift your mindset from reacting to preparing.

If you’ve recently retired or you’re standing at the edge of it, here are three practical steps you can take to move forward with confidence. 

1. Stress Test Your Plan

A well-built retirement plan should be able to weather a variety of market conditions including downturns. Now is the time to review your plan and make sure it’s been exposed to stress testing under different scenarios:

• What happens if there’s a bear market early in retirement?

• How does your plan hold up with higher-than-expected inflation?

• What if you need to withdraw more than expected?

If you’re using a probability-based tool like a Monte Carlo simulation, make sure you understand the assumptions being used behind the scenes. A “90% success rate” can sound comforting, but only if you know what that means in real-world terms.

If you use software like Boldin, you can explore the “what if” scenarios to test how changes might impact your plan. One simple test? Go to the expenses and healthcare tab and add a large one-time disbursement. This will model what happens if a bad market shaves a big chunk out of your retirement savings. Be sure to mark it as tax-deductible so it won't mess up your taxes.

And of course, if you’re working with a financial advisor, they should be able to walk you through how your income plan holds up under all sorts of market stressors.

2. Build a Spending Bucket

This is your safety valve. In my experience, it’s the best protection against what’s known as sequence of returns risk (that’s when early market losses can do long-term damage to your portfolio).

Your spending bucket should hold at least 60 months of planned expenses in low-risk assets that are laddered to mature in the years you need them. This setup allows you to avoid selling growth-oriented investments at the wrong time and gives your portfolio room to recover after a downturn.

Without a spending bucket in place, market volatility can feel a lot more personal. That’s when people start making emotionally driven decisions—and that’s what we want to avoid.

3. Reassess Your Social Security Strategy

Not all retirement income is created equal. And Social Security plays a big role in how much pressure you’re putting on your portfolio.

If you’ve already retired and are delaying your Social Security benefits, there may be good reasons for doing so—but it’s worth revisiting. If delaying benefits means you’re pulling more from your investment accounts during a market downturn, it might make sense to test filing earlier.

The goal is to ease pressure on your investments when they’re most vulnerable. Even a small tweak in your timing or withdrawal order can help your portfolio stay intact longer.

Retirement Is Probably Still Within Reach

Retiring in a bad market is far from ideal—but it doesn’t mean your dream is off the table. With a little preparation, you can still retire on your terms.

So take the time to:

• Stress test your plan

• Build a spending bucket

• Reassess your income strategy—including Social Security

Retirement is about freedom, not fear. And with the right plan in place, you can move forward with confidence—no matter what the market is doing.

If you’d like help reviewing your plan or running these stress tests, feel free to reach out. We’re here to help.