Retirement Planning When the Stock Market & Economy Are in Decline

You spent years setting up your retirement nest egg through a diverse portfolio of savings accounts, IRAs, 401k plans, mutual funds, and stock investments. Then you see the stock market plummet. There are fears of a recession. 

Yet seeing the stock market and economy tank isn’t all gloom and doom. You can still engage in proactive retirement planning when the economy takes a turn for the worse. In today’s blog from Davidson Law Group, we explain how to have good retirement planning strategies when the stock market and economy tank.

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First, Don’t Panic

Plummeting stock markets can make a dent in your retirement planning. You might need to change your plans for a few years. However, the key thing to remember is that stock markets always bounce back. You shouldn’t rush to sell all of your stocks when the financial markets tank. In fact, lower stock prices might be an excellent way to buy more shares of stock to shore up your portfolio for when markets do rebound. A lower stock market means you can buy stocks at a discount.

Have Some Cash Reserves

Consider having one to three years of cash reserves on hand to cover your expenses. There are also seven to nine years of bonds. That way, you don’t have to sell stocks for at least 10 years. Cash reserves include money in your savings account and cash-like investments like short-term bonds.


Diversification of your assets for retirement planning is one way to keep stock market shocks to a minimum. You might be tempted to put more of your money into stocks when the market is booming. However, that’s not a prudent course of action. You should balance your portfolio with savings accounts, bonds, and stocks. A good rule of thumb is to allocate five years of living expenses in cash or cash-like investments like short-term bonds.

You’re Still in It for Long-Term Growth

Retirement planning generally means you’re going to retire around age 65 to 70. When you consider that average lifespans continue to rise, you might still need money to live well into your 80s and 90s. Even at 70, you’re still a long-term investor for the next 20 years! Stocks pay off the most when you have a long-term portfolio.

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Davidson Law Group & Elder Law

Davidson Law Group is here for you to help with your estate planning and retirement planning needs. Our attorneys recognize that everyone’s situation is different, and we’ll make a customized plan that fits your goals and meets your needs. Contact our law firm today in Fort Worth, Allen, or Tyler if you have questions.