Stock Market Losses or Lower Returns: Which Is More Dangerous to Your Retirement?
One eye-opening, simple math equation can clearly show retirement savers the answer to that question, and if you are among those investors who take pride in their high-performing portfolios, you may be surprised.


Do you want to make your savings last throughout retirement? If you do (and of course you do), I believe that once you are within five years of retirement, you need to invest more conservatively than you did while you were growing your savings. But in most cases, a more conservative approach translates into lower returns. Is it a worthwhile trade-off?
I believe so, and I’d like to illustrate my point with a question: If you lost 50% of your money in a bear market, how much would you need to make to get back to even? Did you say 50%? If so, you’re in good company: When I ask this question during seminars, that’s usually the answer I receive. It’s also a wrong answer. Let’s do the math:
How a 50% Gain Can Result in a $250,000 Loss
If you had $1 million saved for retirement and lost 50%, you would have $500,000. Ouch. If you made 50% on that $500,000, you’d make $250,000, which would bring your total up to $750,000, not $1 million. You’d need to make 100% to get back to even.

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.
And if you did need to make 100% to get back to even, how long would that take you? At 2% per year, it would take you 35 years to recover. If you made 6% per year, you would need 12 years to get back to even. Even if you made 10% per year, it would still take you seven years to recover your money. And what are the odds you’d make 10% every year for the next seven years? Sounds like a pretty high expectation to me.
How Realistic Is a 50% Loss?
That's the cost of losing money, and that’s why I believe losing money is more dangerous to your retirement than lower returns. Yes, losing 50% of your money may be an extreme example, but people have lost that much, and in recent memory. The S&P went down almost 50% in the Y2K bear market, and dropped 57% in 2008.
One more factor to consider: I don’t believe many retirees can afford the time cost involved with waiting. If you were retired and living on your investments, would you be able to drastically cut your cost of living while you were waiting for your money to come back to even?
What People Near Retirement Should Do
In my opinion, the best way to make your savings last is to employ a conservative investment approach once you’re within five years of retirement. That approach should include:
- Taking only as much risk as is necessary to accomplish your financial goals.
- Employing a strategy that can protect your investments during bear markets.
Yes, those tactics may result in lower returns. But as I think I’ve shown, the cost of lower returns can be worth the cost of protecting your retirement.
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.

Ken Moraif is the CEO and founder of Retirement Planners of America (RPOA), a Dallas-based wealth management and investment firm with over $3.58 billion in assets under management and serving 6,635 households in 48 states (as of Dec. 31, 2023).
-
Is Your Social Security Earnings Record Wrong? Here's How to Fix It
Your Social Security benefits are based on your Social Security earnings record. It's important to review your records to avoid having your benefits reduced.
-
Stock Market Today: Markets Discount Another U.S. Downgrade
After Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance Agent
Your insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Two Estate Planning Issues You Should Never Overlook
This estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.