As Markets Plunge – How to Protect Your Retirement?

April 7, 2025 — Many people in or near retirement got nervous last week as nearly every stock lost value. Who knows where the market will ultimately go in the wake of Trump’s disrupting tariff moves, but the initial reaction was bad. The S&P 500 experienced a significant decline last week, dropping 9.1% from March 31 to April 4, 2025. This marked the index’s steepest weekly loss since the onset of the COVID-19 pandemic in March 2020. So many are asking – what should I do now?

The worst problem is for retirees who have to take out withdrawals from the IRAs or 401(k)s in the short term. If that money comes out of stocks or equity mutual funds, that money is gone, it will never have a chance to come back. Those who don’t need the money immediately can afford to wait and give the market a chance to recover in the long term.

The NY Times has an excellent article, “How to Protect Your Retirement as Markets Plunge“, which explains some basic strategies for coping with the current market disorder. As one might expect, one is to avoid panicking. If you sell everything now, you might not ever get the money back. No one can time the market to sell high and buy cheap all the time. Shifting money into other investments like bonds, CDs, money market funds might be a good idea. Although they historically don’t perform as well as stocks or stock index funds, they do provide a safe haven. Balanced mutual funds, which offer a mix of stocks and bonds can be another good idea, minimizing your risk but providing a potential upside. Having several months in cash equivalents can help you avoid having to sell assets in a down market.

Bottom Line:

Warren Buffett reportedly sold all Berkshire Hathaways S & P funds a few months ago, so he looks pretty smart right now. But it is probably too late for a major move like that. Retirees who really need to take money out of the market now to live on now could have some difficult choices coming up – which asset class to tap first, and whether to take another look at reducing their expenses.

Comments: What are you thinking about the market and your retirement? Have you made any big moves, or considering some? Please let us know in the Comments section below.