Protect Your Retirement Savings When Markets Plunge

Build a Cash Cushion: Hold enough in stable cash investments to cover 2-3 years of retirement expenses to avoid selling stocks at a loss during market downturns.

Fix Your Mix (a Little): Shift more assets into bonds to dampen losses, especially if your portfolio became heavily weighted in stocks after recent gains. Aim for enough bonds and cash to cover 5-7 years of withdrawals, but don't go overboard as stocks are needed for long-term inflation protection.

Adjust Your Spending: Reduce discretionary spending, both before and during early retirement, to lessen the need to draw from potentially depleted savings. Consider forgoing inflation adjustments to withdrawals or implementing "guardrails" that adjust withdrawal rates based on market performance.

Have a Plan B — and C: Develop alternative lifestyle plans for retirement, ranging from ideal to more financially conservative options, to increase flexibility and reduce anxiety in uncertain economic times.

Work a Little Longer: If still working, delaying retirement provides more time to save and shortens the withdrawal period. If already retired, consider part-time work to supplement income and reduce reliance on savings withdrawals.