As Markets Plunge – How to Protect Your Retirement?
Category: Financial and taxes in retirement
April 10, 2025 — Many people in or near retirement got nervous last week as nearly every stock plummeted. 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. This week the market is bouncing all over the place. So many are asking – what should I do now?
The Worst Thing About a Plunging Market
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.
Comments on "As Markets Plunge – How to Protect Your Retirement?"
Andrew says:
As long as Trump is in office, expect the same chaos you would get with a selfish two year old. If you need any of your stock market funds during his tenure it’s pretty clear that money should be in cash or cash equivalents. Congress might intervene but the Speaker of the House already said he would block any vote against the lordship. Some of the MAGA contingent are willing to break with Trump but not sure if it will be enough.
Mike says:
Heck with protecting it when you can profit from it.
https://x.com/MargoMartin47/status/1910041617160929304
Rufus says:
How about just doing the same thing you did when it plunged 1000 points in August 2024. It happens. Oh yeah and in September of 2022 the headlines were: The Dow Jones Industrial Average fell 1.7% on the last trading day of the quarter, ending the week down 2.7%, about 800 points, and the month down 9.2%, nearly 3,000 points. We bounced back. We will again.
Rufus says:
I went back to previous articles regarding the stock market drop in August 2024 and the plunge of 2022 and didn't find any derogatory comments about Joe Biden. In fact his name wasn't even mentioned. I'm glad we could keep politics out of those articles.