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Prices are not coming down, inflation is rising, mortgage rates are rising, the stock market is near bear territory.
Given all the planning and various strategies that have been discussed on HD, do those retired have any concerns about weathering this storm?
How about those within a few years of retirement? Anything happening that may change your plans.
Complete disregard for all market situations.
I sold everything on March 2nd.
Almost every year I sell once when risk is too high. Usually I’m out for 1–3 weeks, but in 2022, I was out 10 months.
My model is based on timing + slow trading + funds in leading categories that have excellent risk-adjusted performance.
Of course, you can stay in indexes and do pretty well, but you also suffer all the market volatility. Your only solution to lower volatility is bonds.
Sometimes you will be far behind:
Investors with pensions, especially pensions that cover all expenses, are not the norm. Most don’t have them.
History of my allocation
1995-2000 + 2000 until last year = very high % in the US
2000-2010 = value, small cap, international
since 2025 = international
Your equity moves over the last 30 years appear to equal near perfect timing. Seems a bit unrealistic…but congrats. Can I borrow your crystal ball? 😂.
It seems very, very unrealistic to me. I can’t help but wonder about the tax implications of such an amazing market timing strategy. Personally I would publish a book and make millions…there’s obviously a paper trail backing everything up.
We scratch our heads 🤔 and we jest in good fun. Cheers!🍻
😂
No real concern here. Our current income from two SS accounts, one full pension, two smaller pensions provides much more than our expenses.
We are about 70% Vanguard Total World (VT), 10% Vanguard Growth (VUG), 10% Vanguard Value (VTV), 10% Cash. .
I used to fully fund our IRA the first of each year when we were working but now that we’re retired (except a seasonal part time job) I fund our IRA on dips. Each one percent drop gets a $1000 investment
Yes.
1. Half our assets are in CDs and Treasuries precisely because the stock market can dip (or crash) at any time. But other conditions may lead to lasting (hyper)inflation, something we didn’t worry about until a few years ago.
2. We try to avoid politics on this site, but we cannot ignore direct indications from the gov’t that SS and Medicare could be at risk.
3. My dad’s cancer drug infusions cost more than the new 45 foot sailboat he purchased after the first treatments worked. A lot of medical care is not covered by insurance. I read that people have years of cash stashed away, but what if care costs 1.5 years of this or you need LTC at 3x your calculated budget.per year?
4. An assumption made by many is that expenses go down in retirement. I expect my spending to increase. I spend so much time doing an interesting job that I don’t have have time to spend. But I see retirement as a time to stay as busy, but have to pay for it. Or I expect to have grandkids a few hours away by plane, so that might mean an additional household and a lot of travel. And a lot of travel regardless. I see opportunities to spend a lot more.
Aside from LTC which is not medical care, what care do you refer to. “A lot of medical care is not covered by insurance.” In fact, the really serious expensive care is covered, especially with Medicare/Medigap
No concerns. We both have state pensions with COLA’s that more than cover our monthly spending. She began SS in February, proceeds going into our savings/emergency/large expense account. I will wait to age 70 for SS benefits which will create even more financial security. We don’t anticipate needing to tap into our retirement accounts for any typical expense.
That’s a pretty good place to be.
Given the ability to more than cover expenses, I would grab SS now and invest. Income and bird in the hand is the way I look at it.
Richard: it is a good place! I have considered what you’ve suggested, but have 2 reasons for not doing so: first, my SS benefits would likely put us into the next tier of IRMAA. By delaying taking SS, I hope to stall that off or avoid it entirely. Second, and more important, is that I want to provide better income if/when she outlives me.
Happily we planned ahead, and no worries from this front. Have 10 years of cash and my RMD will get us through. This is the key with everything, PLAN ahead. I was taught to be conservative, so that is why 10 years, not 3 or 5, although 5 should be OK for nearly every market. Also, push the numbers, that always helps to get things in perspective. Your friend is the Stock Market Gains over time, your enemy is Inflation.
As a retired couple, like many of Humble Dollar readers, we’re in a pretty secure financial position. With much of negative world events, I took off a month from looking my accounts. I enjoyed not being fixated with watching my various accounts and stocks. I finally realized that I can’t fix the problems in Washington, Israel, Ukraine and Iran….
Any suggestions on how to get into pre-IPO offering of SpaceX, or is the hype just that? I’d like to put in a good chunk into SpaceX and let it roll. It would be nice to tell grandkids in 10 years that I invested in IPO for SpaceX and leave them some life changing money.
I think Anthropic and Anduril will also be great stocks to own when they go public. The trick is getting them at a good price. Always seems the IPO hits at an inflated price (eg, 2x) and then 6-12 months later is a much better buying opportunity.
Of course. Every economic cycle brings its own particular risks and anxieties, and no matter how many you may have weathered in the past, the next downturn (or current one, as it increasingly appears likely) will likely generate similar fears and concerns.
When I was saving for retirement – especially as my retirement date was approaching – my fear was that everything I had saved could be wiped out and I’d be forced to keep working. It didn’t happen, and we were able to retire with a nice nest egg and have enjoyed 12 good years of retirement, so far. However, the effects of a dot.com or housing crises-like downturn is never far from our minds.
That said, has any of this affected our approach to investing? Only somewhat. I have raised cash to fund our RMD’s for several years and have increased our exposure to non-U.S. markets a bit, but not much else. The income generated from our investments, plus SS and a small amount of pension income is enough to live on, albeit with fewer frills. Having good health insurance and no debt is also an advantage at our age.
Anyone who is reading this (i.e., HD readers) is likely not concerned, and likely waiting for the real drop so they can add to their equity positions.
As a retiree, my goal is simple: my net worth must increase every year at a rate greater than the inflation rate. So far, I am outpacing inflation by a substantial margin, but obviously I am helped by a favorable stock market.
Is all that net worth liquid and usable?
Financial assets only.
It’s nice to read stories from people who have their financial house in order and retire with confidence.
It is a nice change from the constant complaining on social media by seniors who claim they deserve more from Social Security, it is not enough to live on, they shouldn’t be required to pay any taxes, especially property taxes, because “they worked all their life and have paid their dues.”
Not at all. Look at the markets over the past 10,20,30,50, etc years. Those lines going up & right are full of micro ups and downs.
There is one caveat. Your horizon. There are plenty of resources to read up on regarding investment mix as we age.
We have no pensions or annuities ( not interested in them) but our combined SS and my RMD are more than enough for us. We give each of our 4 grown kids the bulk of the RMD. We have about $1.5M in my IRA in Vanguard’s federal money market and 1/3 of it in VUSB, ultra short term bond ETF, with some also in VG’s SP500 ETF. This is more than enough for any sustained market crash. The rest of our assets are taxable and in stocks and ETF’s, which is over 70% of our portfolio. As many others said, we’ve been through many ups and downs and just ride them out.
Fascinating story. First time I heard someone not interested in a pension or steady income stream I guess.
Sounds like after giving away most of your RMD, you basically live on Social Security. Is that right?
We give away our RMD too- charity and to the children, but we live on a pension.
Do you have any concern over keeping up with inflation?
100% of our retirement is in “guaranteed money”…Social Security & Annuities.
Portfolio is 100% in VTI and VXUS (80/20) since it is not used for income. We can just watch it recover over the next 9-10 months or 1-2 years, whichever course the market decides to take.
I am a Bogle disciple. “Stay the Course.”
Our retirement plans have not changed, so neither has our portfolio.
No problem, I have a pension and Social Security, neither is correlated with the market. I have an IRA and Roth for inflation but haven’t started doing withdrawals yet. Turning 70 in June. Any drops are a time to buy.
I think most of us have been through periods like this. It’s called THE MARKET. I never made any adjustments in my portfolio for decades. And I’m glad I never did.
MarketWatch headline 3/30
“U.S. stocks are faring worse than during past geopolitical shocks — and there’s plenty of room for them to fall further.” 🙏🏻
I do love a good sale, but I’d rather see the wars end, both in the Middle East, and the Ukraine.
I estimate the S&P 500 is down about 7% from its high, but it is still a couple of thousand points ahead of where it was only a few years ago. Rule 1 is always “keep calm”. I agree with many commenters that one should have some cash or cash equivalents available if things get worse so as not to have to invade your core investment portfolio. Then take the Buffett view – the United States always bounces back.
I have learned long ago in my 50’s you have to prepare and one of the best ways to prepare for your retirement is to run some numbers. A lot has changed in the last 30 years for me, but I assure you running the numbers teaches you many things. I always used my end date that I would live to be 100, that is my goal. That way if I only lived to 90, I be in great shape. I also learned the stock market goes up and down, bonds can be good sometimes dreadful, but have a plan and all will work out. I changed from the proverbial 60/40 portfolio to now 85% S&P and 15% cash. The cash will tide me over for those BEAR markets, and they will happen from time to time. Do you all remember 2000, 2001 and 2002, that is when my portfolio tanked in aggregate 44%, yes you read that right. But I sold NOTHING, and now we have had 20 plus years of a rising market. So the moral is set a plan, but stick to it, and you will make it just fine. There is no perfect plan, there is no perfect 4% rule. Be disciplined and you will do well.
Sounds good to me–since 2000 the “market” has halved twice–gone down by a third once (covid), 25% once and plus or minus 20% three times I believe.
Working with a group of adult “students” I did a hypothetical withdrawal using the 4% + 3% rule 12-months ago A blue-chip value fund we have in this house and invested in for decades and still do, was a $300,000 “income stream”. Same for the S&P 500 Index.
From 2000 to a year ago late March total withdrawal was close to $445,000 and value was a smidge less than $744,000.
Index ran out of money for same period.
Heavy up on bonds and you might have a big issue if you don’t want to destroy your purchasing power. Three decades of retirement and a heavy exposure to bonds is like committing financial suicide–good luck to you.
Every year everything I buy costs more. 7 most important words of a retiree.
Marty Zweig–“those of you with a crystal ball will end up eating crushed glass.”
Nobody can predict the market so don’t even try. So for folks trying to “time” this market best of luck. How well did it work in the numerous volatile markets from 2000-2025?
Small but important pushback on the framing. The 4% plus 3% rule is a simplified version of Bengen’s SWR — and Bengen never intended it to run on 100% equity. His original study used 50/50 stocks and bonds. Run it that way, as it was designed, and it absolutely survives the 25 year timeframe with a surplus. I just ran the numbers.
The irony is that you dismiss bonds, but it’s the bond allocation doing the heavy lifting in 2000-2002 and 2008 — rising while equities fell, funding withdrawals while the portfolio recovers. Strip the bonds out and yes, pure equity fails from a 2000 start. Keep them in and the rule works as intended. Worth acknowledging that before writing bonds off entirely.
For clarity — I don’t actually use the 4% SWR myself. I raised it purely to address the framing, not as something I advocate.
Anyone approaching or in retirement should be practicing wealth defense and that could include some funds outside of the stock market. That’s what experts, including Christine Benz at Morningstar suggest. How much depends upon one’s “sleep number”. Some suggest 5 years’ worth, others suggest more, others less.
Keep in mind the amount is after calculating expenses and subtracting Social Security and Pension benefits as well as other income. For example, if my annual expenses are $60,000 and my only retirement benefit in retirement is a $23,000 annual SS benefit, I would need to pull $37,000 from my savings and retirement portfolio, each year. 5 years would suggest $185,000 in savings outside of the stock market.
What’s the historical evidence?
Since 2000, stock market downturns haven’t lasted more than 19.5 [months]. Some have lasted only 6-7 months. But it can take years for the market to recover and that is what matters. For example, the bear market downturn which began in March 2000 spanned 19.5 months and the market declined 36.77%. However, 10 years later the post down-turn cumulative return was only 20.8%. The October 2007 bear market lasted 14.5 months with a 51.9% decline. Five years later the cumulative return was 136.7%.
As I approached retirement, I re-allocated my retirement funds and accumulated “cash”. At retirement I was 70%/30% stocks/bonds-cash. Today I own even fewer stocks/stock funds.
One of the challenges is to manage greed. This can occur as Fear of Missing Out. I’ve read that long bull markets may foster complacency in investors. In 2007 if one was heavily invested in financials, the negative impact was worse than the S&P average. Today, large allocations in tech may also carry additional risk.
Another component is just how large the retirement fund is, and how many years it will be required to last. As we progress through our retired years, we may find that our savings are excessive. For someone in that situation, the amount of cash may not be critically important. For example, let’s say I were to run my numbers. Quicken’s Lifetime Planner is a useful tool for this and there are others.
I can be sophisticated about this and include a SS benefit reduction if I am concerned about that, or if I am concerned about a “worst case” scenario. In my case, the numbers indicate excessive savings. That implies I could have a larger percentage of stocks, or spend more each year, or reduce savings. Any decision is where managing greed becomes important.
We have raised cash in anticipation of a market decline and have more than enough to weather the usual market storm. However, the question in the back of our minds always is: is this time different? I am happy to be 10+ years into retirement and am less worried about whether our money would last than when I first retired. For those retiring now, or soon to retire, I expect their answer would be different.
We are one year into retirement and have about five years’ worth of cash and short-term bonds so no immediate concerns. I will rebalance into stocks next week to get back to target allocations. We rebalance quarterly per our investment policy statement. The IPS forces us to mechanically sell high(er) and buy low(er) every quarter and eliminates second guessing.
I suspect that most on this forum are overfunded for retirement and have, or should have, no concerns even if economy gets worse. Also, any planner worth their salt would have automatic contingency plans for negative economic events (I change nothing unless the bad economic events are elongated, go on for years). Most likely have 3-5 years of guaranteed income (many guaranteed income for life). So for most it is “smile and wave.” My concerns are more for my kids, whom are much more vulnerable to economic events.
Amount of assets can certainly make a difference, but it’s not everything.
I suspect you’re right that most HD readers have above average financial situations. However, even retirees with less should hopefully have made their decisions accordingly. In other words, they’ve hopefully aligned their expectations with their assets and income such that their spending rates aren’t dependent on everything going well in the economy.
I realize there are plenty of folks who have it tough, just suggesting that it’s not just a question of how much one has, but also of aligning one’s finances, whatever they are, with realistic expectations so that one doesn’t have new ulcers when things go south for a while.
Great points and perspective!
No worries. It is just a “correction” at this point in time. But it might warrant a rebalancing.
Somewhere in the past I read an idea to keep 2 years of withdrawals in liquid assets. Yes, I might miss some investment growth, but I do sleep well at night and don’t fear the market.
I think having RMDs in liquid assets such as cash or short-term fixed income is dependent on whether you plan to spend the RMDs near term. If not, just invest in same/similar investments in your taxable account.
We have enough conservative money to carry us through several years, and our stocks should handle inflation. My market-watching is focused on when to move more money to stocks.
Not too concerned yet. Our portfolio value has now dropped to the level it was in Aug 2025, about 7 months ago. We also own enough bonds to get us through the next 5-6 years, although ultimately my military pension and is what helps me sleep well at night. If that ever went away, I’d begin to get worried.
Others have pointed out your error on the definition of a bear market. However, we should also address your alarm on the other 3 items.
1) Prices are not coming down: thats deflation – it might sound like a good thing, but that is very bad – it means demand is falling which is typically associated with bad economic times.
2) Inflation is rising. Take a look at this link:
Inflation, consumer prices for the United States (FPCPITOTLZGUSA) | FRED | St. Louis Fed
Yes we had a bad run of inflation a few years ago, but inflation as of Feb 2026 was 2.4% annualized. That is within normal range if we look back 40 years. It probably seems high because we had unusually low inflation from 2009 to 2020.
Yes, we are seeing energy spikes due to the activity in the Middle East, and if this continues it will trickle through the economy. However, things have been much worse historically.
Adam your right about recent inflation the big problems was the big rise in inflation a few years ago, and then the compounding yearly inflation rates since.
Regardless of the inflation %, prices are higher for food, gas, rent and other things this year
Today a 30 yr mortgage is 6.56% and five years ago it was 3.08% on average. My son is a realtor, that change matters to a lot of buyers.
…and Realtors
The 3% mortgages were historically low. Per AL the average 30 year mortgage rate over the past 50 years was 7-8%.
3) Now for mortgage rates. Again, look at this data:
30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US) | FRED | St. Louis Fed
As with inflation current mortgage rates are well withing historical norms going back 50 years. They just seem unusual due to a recent 15 year run of historically low rates, which is a hangover from the 2008 financial crisis.
I agree with you Adam. I got a 15 yr, 7.25 percent mortgage in late 1994, my first mortgage, during the interest hike. The problem with now is that the low rates since 2008 caused home prices to rise at a rate much greater than incomes and so now we are in a situation where average mortgage rates, and current home prices, keep many from buying their first home. The Fed really did a number on so many.
True and on top of that many local governments do alot to restrict supply, so this further exacerbates the situation. Our various government agencies often work at odds with policies that restrict supply while simultaneously subsidizing demand in many areas: housing, education, medicine.
For housing another problem is that the majority of people’s net worth is tied to their home equity, so governments have put themselves between a rock and a hard place. Policies that increase supply and lower home prices will make homeowners angry, while people looking for their 1st home are unhappy because house prices are too high. In order to correct this, some folks are going to have to be made unhappy.
Not exactly sure what you mean by restrict supply. But quality of life is also a factor.
When we bought our condo at the bottom of a hill it was woods and trees, now it’s 160 houses
There was one strip of land left filled with pine trees. Then the town was required to add affordable housing and now that last bit of trees is gone too.
I just don’t think more and more people in a limited area is a good idea.
Nearby what was once a 300 acre dairy farm that was turned into a corporate center and now is having all the office buildings
torn down and hundreds of townhouses built. It will put a new strain on the community.
NJ is already the most densely populated state. Ironically the state has a program that pays half of our property taxes to encourage seniors to stay in NJ.
From Standard & Poor–1954-2024
-5%—about 2 times yearly–average length 46 days–last occurred July 2024
-10%–about once every 18 months–length 135 days– last time July 2023
-15%– about once every 3 years–length 256 days– last time August 2022
-20%–once every 6 years–length averaged 402 days–last time Jan. ’22
Warren Buffett:
“The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.”
The stock market is not nearing bear territory by generalized definition. It is nearing, or at Correction, which is down 10%. The generalized recognized threshold for a Bear market is down 20%. Corrections are far more common than Bears. I’m not concerned in a correction, and we are prepared for a 10-year Bear.
No qualms at this point, let’s check back in a few months.
Or days. 😅
Economic chaos is transitory, and I tend not to be concerned about it, but there’s a tiny bit of stress this time because the sudden demise of my lead client is about to put a big dent in my income — and finding new clients at 70 in this environment may be a tad challenging.
But I’m not losing sleep.
Hey Dick,
You stated that, “the stock market is near bear territory.”
What market are you referring to?
These are the results of what I consider the best indicators of both the broad US and international markets as of today’s close:
Morningstar US Index down 8%
FTSE All World Ex US down 10%
The second has just reached correction territory.
WSJ today. “But an intensifying rout in recent days pulled the S&P 500 down for a fifth straight week to its lowest levels since August and dragged the Dow Jones Industrial Average and Nasdaq composite into correction—off more than 10% from their recent highs.” Yikes
Your article stated, “the stock market is near bear territory.” I was merely pointing out that the market was near correction, which is halfway to a bear I don’t consider near. That may be because my portfolio allocation of 45/45/10 has only dropped 4% (recalculated with yesterday’s market close) compared to the market nearing a correction (10%). I also use the Morningstar US market as my bogey as my understanding is it takes into account all of the different major US indexes. I use this as a comparison because my equity ETFs are either Vanguard Total (US) Stock or Total World.
I can see why you often write that you could be too stressed to live off your portfolio. As they say, “know thyself.” And it appears you do.
A 10% correction doesn’t worry me given a diversified portfolio and some years in cash and stable assets.
A correction triggers a 5% overweight in stocks and moving forward some months of my Roth conversions in my plan. So a correction triggers a slight overweighting of equities as stocks are on sale. A bear means overweight by 10%. Then a sale back to my original targets as the markets recover and hit correction and a new high. Because of the recent several year continued climb upwards of the markets the opportunities to take advantage of stocks significantly on sale have been rare since the COVID sell off.
I do, but I don’t always like it.
What about a correction along with high inflation?
Dick if you are saving money in retirement rather than spending down your portfolio why do you even look at how the markets are performing? If you are not tapping your portfolio to pay for necessities then you have forever for your portfolio to recover.
Who I’m concerned for are those with minimal assets in their retirement accounts who are having to tap gradually increasing percentages of their accounts due to inflation just to pay for their necessities. Their accounts could eventually run dry, then what will they do?
The average consumer doesn’t have the assets the readers of this blog have. Most here are not worried, it the younger crowd growing a family and paying exorbitant child care fees worry about the rise in prices this year, now exacerbated by the war the US started in Iran
Still not concerned. Our equity allocation is such that it should keep pace with inflation, and some of our bond allocation is also designed to protect purchasing power through inflation. Social security once we take it should also. The same cannot be said of most US pensions and annuities. Nothing against those, just a distinction worth noting in the context of the question.
As with us. No concern here because we also have a portfolio designed to let us sleep well no matter if the markets are up or down, nor how much. Even if the downturn outlasts my 10 years of safe cash and short term bonds including TIPS our plan is to claim Social Security in two years at 70 at which time we will be only touching our portfolio for discretionary spending.
A correction along with high inflation? Strangely enough, that scenario was covered with one of those pesky spreadsheets 😂
I should have said nearing, but what I read says there are many warning signs of heading to that territory.
I’m retiring within the next two years. I haven’t changed anything. According to Boldin, even a ten-year downturn would not affect us at this point.
Based on a decade of poor returns your Chance of Success could be 99%
Start of downturn: Feb 2028 (latest retirement date)
Annual returns during downturn: 1% / y
Downturn duration: 10 years
No concerns on our end either. We have a ten-year bond ladder running alongside a ten-year term annuity, and together they cover all our spending needs. When I set both up, I built in a 30% margin to account for inflation over that period, so right now we’re actually spending less than they generate and banking the difference for later years.
My view is that anyone in retirement should have fixed income, or some form of cash equivalent, sufficient to last at least five years — without ever needing to touch their equities.
I’m near retirement and all set with the portfolio AA initial conditions, specifically with a healthy dose of fixed income ready to weather an inevitable market downturn. What I’m a bit unsure of is refilling my fixed income efficiently &!sufficiently as time goes on. I have the usual plan of rebalancing and its nuances, but we’ll see how it goes. I’m fairly confident, have read a ton and run the numbers but haven’t done this before. Retirement: There’s always that first time ;).
I’m not concerned for us, Dick. We have a CD ladder capable of providing ten years worth of spending. Our investment allocation is near 50/50, and I have no qualms with becoming more aggressive should the bear arrive.
I feel for young families that lack our comfortable cushion.