“The investor’s chief problem, and even his worst enemy, is likely to be himself.”, Benjamin Graham
If recent market headlines have made you uneasy, you’re not alone. Volatility has a way of triggering worry, especially for those in or near retirement. But before reacting, it helps to step back and look at the bigger picture.
The Basics: Bear vs. Bull
A bear market occurs when markets drop 20% or more from a recent peak. They feel unsettling, but they are not unusual. Over the past 50 years, bear markets have averaged about one year in length with an average decline of 31%. The longest lasted just under two years.
A bull market is the recovery and growth period that follows, and historically, it lasts much longer. Since 1949, bull markets have averaged 5.3 years, with total returns averaging over 250%.
The pattern repeats across decades: markets fall, then they recover. Recovery has been the rule, not the exception.
What This Means for Retirees
For those living on retirement income, the concern isn’t just portfolio performance, it’s whether your money will be there when you need it. A few principles can make a meaningful difference:
Protect your cash flow. A well-structured portfolio shouldn’t require selling investments at a loss just to cover living expenses. Having 3-4 years of spending needs in more stable, liquid assets can provide a buffer during downturns and peace of mind year-round.
Stay disciplined with rebalancing. Bear markets can actually create opportunity. Trimming what’s held up and adding to what’s declined, done consistently, is the practical definition of “buy low, sell high.” It works best when done calmly, not reactively.
Don’t let headlines drive decisions. As Peter Lynch once observed, more money has been lost preparing for market corrections than in the corrections themselves. Selling after a decline locks in losses. Waiting on the sidelines risks missing the recovery. The most effective response to volatility is often staying the course.
Bull Markets Come with Their Own Temptations
When markets are rising, the risk shifts from fear to overconfidence. The temptation to take on more risk or concentrate in what’s been working can quietly undermine a retirement plan built for durability. Strong markets are a good time to rebalance gains, not to chase them.
The Bigger Picture
Even in retirement, financial plans often span 10, 15, or more years. History shows that even the most severe downturns have resolved within those timeframes, as long as portfolios were structured to weather them without forcing poorly timed sales.
Markets will always cycle. What makes the difference isn’t predicting those cycles. It’s having a plan that works through all of them.
If recent market conditions have prompted questions about your own financial picture, it may be a good time to revisit your plan with your advisor, or give me a call. I’m here to help.
