This is a question I get all the time at Manna Wealth Management:

“David, what happens if I retire right when the stock market is down?”

It’s a valid concern. Nobody wants to start retirement just as the market takes a dive. After all, you’ve spent decades building your savings, and the idea of losing a chunk of it in the first few years of retirement can be scary.

Let me walk you through what it means to retire during a market downturn, why it matters, and—most importantly—what you can do about it.

Why Timing Matters

When you’re working and contributing to your 401(k) or IRA, downturns aren’t always bad. You’re buying shares at lower prices, which can actually help in the long run.

But once you retire, the game changes. Instead of putting money in, you’re taking money out. If the market is down 20% and you’re still withdrawing the same dollar amount, you’re selling more shares than you would have otherwise. That’s where the danger comes in.

This is called “sequence of returns risk.” Simply put, the order of your investment returns in retirement matters. A big downturn early on can cause your portfolio to shrink faster than you expected.

Example: Two Retirees, Same Savings, Different Timing

Let’s imagine two retirees:

• Retiree A retires in a strong bull market. Their $1,000,000 portfolio grows 10% in the first year, even while they withdraw $40,000. They start retirement feeling comfortable.
• Retiree B retires in a downturn. Their $1,000,000 drops 15% to $850,000, and they still need $40,000 to live on. Now their nest egg is down to $810,000 after year one.

Both started with the same savings, but the sequence of returns put Retiree B in a tougher spot.

This doesn’t mean Retiree B is doomed. It just means they’ll need a smart strategy to ride out those early years.

How I Help Clients Manage This Risk

When clients sit down with me—whether in person or through our contact page—I don’t just look at their total savings. I look at how their money is invested, where their income will come from, and how flexible their spending can be.

Here are a few strategies I often recommend:

1. Build a Cash or Bond Buffer

Think of it like keeping a cushion. If you have 2–3 years of living expenses in cash or short-term bonds, you don’t have to sell stocks when the market is down. That gives your investments time to recover.

2. Stay Flexible With Withdrawals

If the market takes a hit, we may decide to scale back withdrawals for a year or two. For example, instead of $40,000, maybe it’s $36,000 for a short period. A small adjustment can make a big difference long-term.

3. Diversify Your Portfolio

Having a mix of investments—stocks, bonds, real estate, maybe even annuities—helps reduce the impact of a downturn. We don’t want all your eggs in one basket.

4. Consider Guaranteed Income Sources

Social Security, pensions, or annuities can provide a baseline of income that isn’t tied to the market. This can take the pressure off your investment accounts during downturns.

Real-Life Conversation

I once worked with a gentleman who retired right around the 2008 financial crisis. Understandably, he was nervous. His $900,000 portfolio dropped significantly in the first year.

Instead of panicking, we adjusted his withdrawal rate slightly and leaned on his bond and cash reserves. Within a few years, his portfolio had recovered, and today, he’s doing just fine.

The key lesson: downturns don’t last forever, but how you react to them makes all the difference.

The Big Picture

If you retire during a market downturn, it can feel like the worst timing in the world. But here’s the truth:

• Markets recover. They always have.
• A well-structured plan can help you weather the storm.
• Flexibility is your greatest ally in retirement.

It’s not about avoiding downturns—they’re inevitable. It’s about making sure you have a strategy in place so your retirement dreams don’t get derailed by short-term market moves.

Final Thoughts

If you’re worried about retiring in a downturn, know this—you’re not alone. Many of my clients have asked me the same question, and together we’ve built plans that give them confidence, no matter what the market is doing.

If you’d like to talk through your personal situation, feel free to reach out to me directly. And if you’d like to know more about my background and how I help retirees every day, you can learn more here: David Kassir.

At Manna Wealth Management, my goal is simple: help you enjoy retirement without constantly worrying about the next market dip.

Because retirement should be about living, not stressing.