You're not alone in thinking that managing your retirement savings in a down market is a challenge. In fact, you may be tempted to make immediate changes in hopes of protecting your investments. Acting too quickly may lead to making choices that don't align with your goals — and may even keep you from reaching them. Keep the following information in mind before making any moves.

What a volatile market means

Lower volatility

is when the price change is slower, less significant and over a longer period.

Higher volatility

is when the price change is faster, more significant and over a shorter period. Rapid price changes can impact the value of your retirement portfolio.

What a bear market means

A bear market is when the stock market experiences a sustained period of price declines. In fact, typically it describes a condition in which securities prices fall 20% or more from their most recent all-time high. A bear market does not guarantee that a recession will occur, and market corrections have always been temporary. A recession occurs when the U.S. economy has 6 consecutive months of negative growth.

How the market can affect your retirement portfolio

Whether you're in the midst of a volatile market, a bear market or a recession, the value of your retirement portfolio could be significantly affected. Watching your account total go up and down, or continue to go down temporarily for a period of time, isn't easy. But it's a normal part of investing in the markets. In fact, there have been periods of increased market volatility throughout the long history of the U.S. stock and bond exchanges.

When the news influenced the S&P 500 Index (1986-December 2024)

A line chart titled 'Wall of Worry: When the news influenced the S&P 500 Index (1986-December 2024).' The x-axis represents years from 1986 to December 2024, and the y-axis represents the S&P 500 Index value ranging from 0 to 6,000. Key events are marked along the timeline with blue boxes indicating significant occurrences such as 'Black Monday' in 1987, 'Iraq/Kuwait War' in early '90s, 'Hedge Fund Long-Term Capital Management collapses' in late '90s, 'Peak of dot-com stock bubble' around early 2000s, 'Sept.11 terror attacks' in late '01, 'Financial market crisis' around '08-'09, 'Peak of housing bubble' around mid-2000s, 'U.S. debt downgrade' around early '10s, 'Coronavirus pandemic' starting from late '19 to early '20s, and recent events like 'Inflation surge & Fed rate hikes' and 'Trade uncertainty.' Periods of recessions are shaded lightly on the chart. The overall trend shows a significant increase in the S&P 500 Index over time despite fluctuations due to these events.

Source: FactSet, Dec. 2024

You may be wondering "But how bad are my losses going to be in this current market?" As the chart above illustrates, history has shown that periods of market turbulence are fleeting and that the market has gone up over time. For example, the S&P 500® Index is up around 170% since the lowest point during COVID.

This illustrates why investors should ignore short-term market noise and stay focused on their long-term investment strategy.

Tips on what to do in a down market

Refer to these 5 tips before deciding to take action in a down market

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1. Resist the urge to do “something” right away
Don't let market fluctuations alone make you change investments. Remember, bad years are generally balanced by good years.
Markets down line chart

2. Stay calm through the ups and especially the downs
Make sure you temper your expectations for growth. Your asset allocation should be based on return expectations needed to meet certain goals and objectives. If your portfolio includes stocks, down markets are already factored into your long-term return expectations.
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3. See the opportunity with market losses
By continuing to invest regularly during a down market, you'll often be able to buy more of your chosen investments with the same amount of money as before. Riding out the down market so that you can participate in the rebound should be the goal.
Pie chart

4. Don't check your portfolio too often
Reviewing your allocations and making necessary changes periodically is smart, but checking too often may lead to hasty decisions that negatively impact your returns.
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5. Forget short-term losses in the past
Don't dwell on how much more your portfolio was worth at the time of its most recent high. Unless you sell investments or withdraw funds, the “losses” are only on paper. Long-term investing historically leaves plenty of time for the market to recover.

Of course, you should always keep in mind that investing involves risk, including the possible loss of principal.
Need more tips on how to avoid emotional investing? Watch this video.

To learn more about investing concepts and investing through your plan, visit our resource center.