6 Ways to Protect Your Nest Egg If You Fear a Bear Market
No one can predict what stocks will do next, but there are plenty of things worried investors and retirement savers do have control over.


Lately, clients seem to be more concerned than usual that a market correction is looming. And naturally those nearing retirement want to be sure their nest egg is protected.
Of course, no one can predict what the market will do next — and it’s a dangerous game to try — so it’s best to focus on what you can control, rather than what you can’t. Here are some tips to get you started:
1. Have an investment plan.
If you’re nearing retirement, you may have several investment accounts — a 401(k) or 403(b) at work, a brokerage account of your own and maybe a Roth IRA or some other assets. Your comprehensive plan will help coordinate it all based on your goals.

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.
Often, we find prospective clients don’t even know what they have. They made investments years ago and tucked the paperwork in a drawer, or they set the asset allocation on their 401(k) when they opened the account and haven’t reviewed it since. Not knowing is not OK; it puts your savings at risk. Getting a written plan is one of the best ways you can secure your future.
2. Stress test your portfolio to make sure you know what risk you’re under.
Most people think of risk simply as the potential for loss as the market goes through a correction, but, depending on the type of investments you have, there are several other factors to consider: tax consequences, call risk on bonds, liquidity risk or currency risk if you’re investing outside of the U.S. A stress test can help identify the weak points in your portfolio and is a good starting point for your overall plan. Stress testing your portfolio is taking a look at your holdings through a full market cycle. A stress test will enable you to see how your portfolio would be impacted if went through another major market correction like 2008. One of the tools we use to stress test clients portfolios is Riskalyze.
3. Know your timeline for withdrawals.
You should have a strategy for when you’ll tap into your various retirement accounts. If you expect to access funds in the near-term, make sure they’re in more conservative investments or a money market account. That way, if there is a market correction or pullback, you won’t have to sell investments that have lost value for the short-term. You can risk, and continue to grow your money, in accounts that have a longer timeline.
4. Rebalance and reallocate.
If you had a 50%/50% stock-bond allocation in 1996 and just let it go for a decade, at the end of 2016, because the stocks appreciated, you would have had a 69%/31% mix. This would significantly increase the risk in your portfolio, especially with the market highs we’re experiencing now. Rebalancing is always important, but it’s a crucial part of retirement planning. Rebalancing your portfolio would take you back to your original allocation. This is often hard to do because it often means reducing positions in your winners and adding to your underperforming allocations.
As the economy changes and we go through different market cycles, you’ll also want to reallocate your assets to be sure you aren’t taking any unnecessary risk. Reallocating your assets is different than rebalancing in that we are changing the overall default allocation. One simple general allocation method is the Rule of 100. The Rule of 100 states that if you take 100 minus your age that is the amount of your portfolio that should be in stocks or more risky assets. This would require you to adjust your allocation or reallocate annually.
5. Take the “free” money.
If your employer has a 401(k) match, make sure you’re at least contributing enough to maximize that benefit. Occasionally, I’ll meet with someone who says they’ve stopped making contributions to their plan because retirement is close and they don’t want to risk putting more money in the market. Depending on the details of your 401(k) plan, your match could be up to 100% of your contribution. I don’t know of any savings accounts that will give you 100% more when you make a deposit, so don’t pass up this opportunity. 401(k) plans have a stable value fund or a money market fund that you can allocate your existing principal or ongoing contributions to in order to get the benefit of the match while not taking additional risk.
6. Don’t try to time the market or chase returns.
Many investors think they can time the market by pulling out money when they perceive there’s more risk. This can drastically impact long-term returns.
According to a Morningstar study, if you were fully invested in the Ibbotson Large Company Stock Index from 1997 to 2016, your annual compounded rate of return would be 7.7%. But if you had the same investments and missed only the 10 best days during all those years, your return would be only 4%. And if you really weren’t good at all at market timing and missed the best 40 days, your return would be -2.4%.
Unless you have a crystal ball, timing the market is something you should stay away from. So is second-guessing your investment plan and chasing returns.
If you’re nearing retirement and you’re nervous about your investments, you don’t have to go it alone. A financial adviser can help you navigate more confidently through the ups and downs of the market and the many years ahead.
Kim Franke-Folstad contributed to this article.
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.

Josh Leonard is the president and a financial adviser at Leonard Advisory Group, LLC. He is the host of the “Relax, It’s Retirement” podcast and holds regular informational webinars. He is a married father of two and an aspiring endurance athlete. He holds a life insurance license and has passed the Series 65 securities exam. (Investment Advisory Services are offered through Leonard Advisory Group, LLC, a registered investment adviser. Insurance products and services are offered and sold through Joshua Leonard, an individually licensed and appointed agent.)
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears Ebb
Constructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility Bills
If passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
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.
-
The Six Pros This Adviser Says You Need to Sell Your Business
Selling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth
Consistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key Pieces
If retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or Relocate
Homeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What Happens
Combining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.