By Jessica Lanning, JD, CFP®


A down market can impact when you retire, and withdrawing money early on from a depleted account can affect the growth of those accounts. In this blog post, I will discuss how to manage your retirement income during a down market.

Why a Down Market Matters

Here’s why anticipating a down market in your plan matters.

  • A down market can reduce what you have available to spend.
  • A down market can create anxiety about letting go of one’s paycheck.  
  • Withdrawing money from a depleted account affects the future growth of that account.
  • The market typically experiences a negative trend roughly every three years.

How to Anticipate a Down Year

Predicting a down year is borderline impossible, but you can predict when you will retire. Starting retirement planning ten years before you plan to retire, then again five years before and annually thereafter, can help you create a retirement plan that can withstand market downturns. Some things to consider:


  • Evaluate your retirement portfolio’s performance and risk tolerance.
  • Run a scenario where you retire, and the market is in a downturn.
  • Diversify your investments to minimize your losses during a down market.
  • Consider consulting with a financial advisor to help you create a solid retirement plan.

Common Retirement Planning Mistakes

Retirement planning is key for a successful retirement, but it’s easy to make mistakes when planning. Some of the most common retirement planning mistakes are:

  • Not planning at all.
  • Retiring based on strong market performance without considering the impact of a down year.  It’s always easier and more tempting to retire when your account balances are high.
  • Failing to include an analysis of the impact of a down year early in your retirement plan.

Managing Your Retirement Income During a Down Market

Retiring during a down market can be challenging, but it’s possible to manage your retirement income. Some things to consider:

  • Have several options for retirement dates if possible.  Pick the one that aligns best with your retirement plan, account balances, etc. These decisions may be made year-to-year until you do stop working.
  • Keep working.  This may be impossible or unappealing, but it may be necessary to cover your expenses.
  • Spend less: Consider postponing expensive trips until the market recovers.
  • Keep your money invested and wait for the market to recover: Consider investing in bonds or other low-risk investment options to minimize your losses.
  • Time-block your money: Have one to two years’ worth of expenses in cash and another five years invested conservatively to cover expenses so if there is a downturn, the remainder of your money has time to recover.

Planning ahead, expecting a down year, and managing your retirement income during a down market can help you create a solid retirement plan no matter what the markets do.  

If you’d like to talk about how to anticipate a down market while not working, please reach out.



About the Author:

Jessica Lanning JD, CFP® brings focus and perspective to your individual financial needs to identify your opportunities for investment and wealth. Regardless of what you’ve done before or what “mistakes” you think you’ve made, Jessica can help get you back on track quickly and safely. As a former practicing lawyer, she brings a comprehensive approach to legal, tax, and financial challenges so that her clients can enjoy peace of mind. A huge proponent of conscious decision-making, Jessica makes sure her clients are educated and informed so that they make sound decisions with clarity and confidence. 


Lanning Financial Inc. is a registered investment adviser. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.


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