Right Now Is the Right Time to Prepare for the Next Bear Market
Yes, stocks have been on a record-breaking tear for a long, long time. And that's precisely what makes it the perfect time to take a step back and make an adjustment with your portfolio.


No one knows exactly when the next bear market will blow through the nation’s nest eggs.
Jim Cramer, Jean Chatzky and Suze Orman won’t show up in your town wearing matching windbreakers the way the Weather Channel team does when a storm is on the horizon. By the time you realize what’s happening to your portfolio, it’s unlikely you’ll have a chance to get out or do much to protect your investments.
The best time to prepare for a bear market is when a bull market has run for many years and the market is near record highs.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You know, like right now.
I know that’s easier said than done.
We’ve been enjoying the benefits of this bull run for more than eight years now. Which means it keeps getting harder to remember what happened in 2000 and 2008, and it keeps getting easier to put off making any changes that could rein in your current returns.
But if you’re only two or three years from retirement, you simply can’t be complacent. You can’t afford to lose sight of the amount of risk in your portfolio — or what could happen to the long-term goals those investments are there to help you attain.
If you have most of your money in the market, it’s time to take a look at your age and your asset allocation and do a reality check.
The Rule of 100 is good place to start. You just subtract your age from 100 and invest the remaining number in equities. So, for example, a typical 60-year-old would keep 40% of his or her portfolio in stocks and the rest would be in safer assets.
It’s not a set-in-stone answer, of course. You have to consider your risk tolerance, your income needs, your lifestyle goals, your family dynamics and other factors. But it will give you some idea of where you should be.
Income is everything in retirement, so it should be your priority in planning. You should have a good idea of how much you’ll need and where it’s going to come from. If you have a pension coming, and/or generous Social Security benefits, you may have a little more flexibility. You could leave a bit more money in your risk bucket with the goal of harvesting more gains when the market is up. But if most of your income is coming from your investment accounts, you have to take a couple of things into consideration:
- If it’s a tax-deferred retirement account (such as a 401(k) or 403(b)), a portion of that money actually belongs to Uncle Sam. (And sooner or later, he will come to collect — you can count on it.)
- You can’t expect or depend on your money to keep growing at the rate it is right now for the next 20 to 30 years. Those rates will always fluctuate, affecting the amount you can safely withdraw.
So, if you’re looking for less risk and more safety, where can you invest without losing out to inflation?
A lot of investors go for mutual funds — and there are even a few, such as the Grizzly Short Fund (ticker: GRZZX) and the Federated Prudent Bear Fund (BEARX), that are built to profit in a down market.
But if you’d prefer something less aggressive (and finicky) you may want to look at sturdy, recession-resistant, port-in-the-storm U.S. companies that are dividend payers. Those payments can help offset some of your losses if there is a downturn — and you might even use them to buy more shares while the price is right.
A word of warning: It can be stressful and costly to try to time the market. No one can predict with 100% accuracy why or when it will rise or fall.
Instead of focusing on the turbulence, listening to the what-ifs and making decisions based on emotions, put your energy into shoring up a retirement plan that will help you ride out the markets’ stormiest days — and every day through retirement.
Kim Franke-Folstad contributed to this article.
The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Chad Slagle is the President & Founder of Slagle Financial, a Midwest based financial planning firm that has offices throughout Illinois and Missouri. He is the host of “The Chad Slagle Show: Coaching You To and Through Retirement” and author of "Winning in Retirement: When Every Day is Saturday." Since 1995, Chad and his team of advisers have educated thousands of pre-retirees and retirees on how to make better decisions with their hard-earned dollars.
-
5 Low-Cost Ways to Protect Against Identity Theft
SPONSORED Stay ahead of identity thieves and maintain your peace of mind with these simple, affordable steps.
-
Upgrades to the CBP Entry Process Ahead of Peak Summer Travel Could Streamline U.S. Border Entry for Travelers
Enhanced processing could make international travel into the U.S. smoother and easier this summer.
-
A Financial Adviser's Defense of Annuities: They're Just Misunderstood
Annuities can offer retirement income stability and security against market volatility, though some do have drawbacks. The key is to understand their features before buying.
-
Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve It
How confident are you that your money will go the distance? Building a balanced portfolio can shore up your investments' long-term stability.
-
How My Dad Taught Me the Compounding Returns of Fatherhood
As Father's Day approaches, I remember how my father's small acts of love and generosity added up over time and influenced my relationships with my own children, proving that the best investments can grow across generations.
-
Financial Professional's Key to Peace of Mind in Retirement: Income Planning
Creating guaranteed income sources in retirement will help you truly enjoy your golden years and spend less time worrying about money.
-
Don't Let a Market Crash Crush Your Retirement
It's a comfort to know that with the right strategies, you can weather just about anything a crazy stock market can throw at you.
-
Wealth Advisers: In Estate Planning, the End Is Just the Beginning
We need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.
-
Stood Up by a Radio Show: But Was It a Breach of Contract?
A conscientious financial planner reschedules his clients after being invited onto a talk show and ends up losing one of them at a cost of $5,000. What does the radio show owe him, if anything?
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)
Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.