Don’t Let Market Downturns Rain on Your Retirement Parade

Consider ‘timely investing’ vs. ‘time in the market’: Your lifestyle and retirement priorities dictate how you judiciously invest, rather than investment returns dictating your lifestyle.

An older man happily dances in the rain under an umbrella.
(Image credit: Getty Images)

You’ve probably heard the adage “time in the market” — not timing the market — as a rule of thumb for investing success. This philosophy stems from long-standing proof that, despite dips or even sharp declines in the stock market, many investors experience positive results over the long term.

Time in the market certainly applies if you are younger, say 45 or under, and with 20 years or more until retirement. In that case, time is your friend. But for people nearing retirement, transitioning into it or already retired, time in the market can feel much more condensed and worrisome. Big and prolonged market downturns can be devastating to those in the retirement window who are counting on their investments to fund a sizable part of their fun activities in their first few years of retirement.

We’ve had several major downturns going back to the early 2000s. The recent quirkiness of the markets, affected by interest rates, inflation and other factors, has put the possibility of another steep fall more on the radar for people who have left the workforce for good or are close to doing so. These dark periods of stock declines can be detrimental for two reasons:

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  • It can take as much as a decade to recover. The years 2000 to 2009 became the lost decade, because the market return was essentially flat over that time span. Many people in their retirement planning don’t factor in the potential long recovery period.
  • Catching up is harder with dwindling market value. If you need to draw income from your investments during that down period, the problem is compounded. Imagine you have $500,000 invested in the market for your retirement, and you need to draw 5%, or $25,000, a year to live on. Add that to, say, $30,000 annually for Social Security, and you’re living on $55,000 a year. Let’s say the market goes down 25%. Now your $500,000 is worth $375,000. If you take out 5%, you’re getting only $18,750. Or, if you still need $25,000, now you’ll have to withdraw 6.6%.

You can’t control the markets, but you can control how you invest while planning ahead for retirement. Instead of time in the market, it’s better to think in terms of timely investing. Here are the three key parts to that:

  • Consider your lifestyle, travel, hobbies and family memories you want to create. How much is it going to take to do all these things? Plan accordingly for that, and be realistic and honest. Don’t let your investment returns dictate your lifestyle, but let your lifestyle and retirement priorities dictate how judiciously you invest.
  • How long do you want to have your money protected for these goals? Is it for three, five, seven or 10 years or more? How much do you want to make sure the market will not determine whether you can or cannot do those things you were hoping to do early in retirement? If you’re down 25% to 50% in the market in a given year, and assuming a slow market recovery, you’re either not going to do the things you were planning, or you’re going to be stressed out when doing them with far less money. You have to plan ahead for protection so a market storm won’t rain on your retirement parade.
  • When the market gives you positive times, take advantage of them. Take some money off the table — go ahead and fund those future activities when the market is strong. For example, if your $1 million goes up 30% to $1.3 million, why wouldn’t you take that $300,000 off the table to pay for those things you want to do those first few years in retirement? It’s a mistake to assume the market will keep going up and up, and the $1.3 million is going to become $1.5 million and then $1.7 million, and that you need to leave your money alone. That’s investment adviser-speak because they’re trying to live your life for you. Waiting could be your downfall if the market goes down for a year or more.

Retirement can and should be among the best times of your life. The stock market is a good bet for the long haul, but to lessen the chances of market uncertainty and instability undermining your retirement fun, plan for timely investing — to put time on your side.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a public relations program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger was not compensated in any way.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Barry H. Spencer, Registered Investment Adviser
Co-founder, Wealth With No Regrets

Barry H. Spencer is a Registered Investment Adviser and co-creator of Wealth With No Regrets® (
He has appeared on national and regional programs as a financial educator, author, speaker and specialist in estate strategies and charitable giving.