7 Ways to Protect Your Retirement Nest Egg in a Volatile Stock Market

After a long stretch of calm and a relentless rally, the stock market appears to be taking a breather.

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After a long stretch of calm and a relentless rally, the stock market appears to be taking a breather. No one should be surprised -- unless you’re surprised it took so long for this bull market to take some downtime. Stock market corrections, typically defined as a loss between 10% and 20% from the peak, occur about every two years, on average. The last one began in May 2015, so we’re due, especially considering that the Standard & Poor's 500 index trades at about 18 times estimated corporate earnings for the coming 12 months, above the five-year average of 16 and the 10-year average of 14. Get used to a rockier market, says Jim Stack, president of InvesTech Research and Stack Financial Management “The road ahead will be more volatile with increasing risk,” he says.

When a market is ready to correct, it will seize on a trigger -- and this market has plenty to choose from. Worries include some warning signs of inflation, with wages ticking higher. Bond yields are rising, making stocks look even more expensive in comparison and raising fears that higher rates could eventually crimp economic growth. All eyes are on a new Federal Reserve chief as the central bank navigates a tighter monetary policy in 2018. And then there’s the partisan divide in Washington, with intermittent threats of a government shutdown, not to mention escalating nuclear tensions with North Korea. Whatever the cause, any market drop is particularly worrisome for retirees and near-retirees, who have less time to make up for losses. Here are seven tips to help you survive any turmoil.


This is an updated version of a story originally published in 2017.

Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.