How to Adjust Your Retirement Plan After a Market Dip (Without Panicking)

You are not alone if you have watched the markets dip and feel uneasy about your retirement plan. It is natural to worry when you see your portfolio balance drop, but I want to remind you—that market downturns are part of the investing journey. The key is to stay calm, make thoughtful adjustments, and keep your long-term goals in focus.

Here is what I would do (and suggest to a good friend) to keep retirement on track after a market dip.

1. Take a Breath and Review Your Plan

First things first—do not panic. A market downturn does not mean you need to make drastic changes. Instead, take a step back and review your overall retirement strategy.

Ask yourself:

§  Am I still on track with my long-term goals?

§  Is my portfolio diversified enough to handle market fluctuations?

§  Do I need to withdraw from my investments right now?

Staying the course is usually the best move. If unsure, it might be a good time to consult a financial advisor for a second opinion.

2. Check Your Asset Allocation and Rebalance

A market dip can throw your portfolio out of balance. If stocks have dropped, your mix of stocks, bonds, and cash may not be where you originally planned.

For example, let us say your target was 60% stocks and 40% bonds, but after a market drop, your portfolio is now 55% stocks and 45% bonds. That means your portfolio is more conservative than you intended, and you might want to rebalance by buying more stocks while they are "on sale."

Pro tip: Vanguard and Fidelity recommend checking your asset allocation at least once a year and rebalancing when necessary (Vanguard, 2024; Fidelity, 2024).

3. Adjust Withdrawals If You are Already Retired

If you are already withdrawing from your investments, consider scaling back temporarily. Pulling out too much during a downturn can lock in losses and reduce the length of your savings.

Here are a few ways to adjust:

§  Reduce withdrawals slightly if you can. Cutting back by a tiny percentage now can give your portfolio time to recover.

§  Use cash reserves instead of selling investments at a loss. This can help you ride out the downturn without touching your portfolio.

§  Delay significant expenses if possible. If planning a major purchase, consider holding off until the market rebounds.

Interesting stat: Studies show that retirees who follow a flexible withdrawal strategy have a higher chance of their money lasting through retirement (Morningstar, 2024).

4. Keep Investing—It Pays Off in the Long Run

If you are still in the saving phase, now is NOT the time to stop investing. It is tempting to pause contributions when the market is down, but history shows that those who stay invested during downturns see more significant gains when the market recovers.

Real example: Fidelity studied 401(k) accounts during the 2008 financial crisis and found that investors who kept contributing saw their balances recover and grow significantly more than those who stopped investing (Fidelity, 2024).

Dollar-cost averaging—investing a set amount regularly—can be a tremendous current strategy. When stocks are down, your money buys more shares, setting you up for more significant gains in the future.

5. Consider Delaying Social Security (If Possible)

If the market dip has you worried about running out of money, one option is to delay claiming Social Security. Every year, if you wait past the full retirement age (up to age 70), your benefits increase by about 8%. That is a guaranteed return—something the stock market cannot promise.

If you have other savings to live on for a little while, this strategy can help maximize your retirement income.

Check your numbers: You can see how delaying affects your benefits using the Social Security calculator at SSA.gov.

6. Take Advantage of Roth Conversions

A market dip might be a great time for a Roth IRA conversion. Since your investments are worth less, you will pay less taxes on the amount you convert from a traditional IRA to a Roth IRA.

Why does this matter?

§  Once the money is in a Roth IRA, it grows tax-free forever.

§  You will not have to take required minimum distributions (RMDs) later.

§  When the market rebounds, all the growth in the Roth account is tax-free.

It is not the right move for everyone, so it is worth talking to a tax professional to see if it makes sense for you.

More info: The IRS explains Roth conversions at IRS.gov.

7. Stick to Your Long-Term Plan

Market dips are regular. The S&P 500 has experienced crashes, recessions, and bear markets, but it has always recovered.

If you stay invested, rebalance when necessary, and keep your withdrawals in check, you will be much stronger when the market rebounds.

If you are unsure, let us grab a coffee and talk it through—or better yet, schedule a chat with a financial advisor who can help tailor a plan for your situation. You have got this!

Final Thoughts

The worst thing you can do after a market dip is panic and make emotional decisions. Instead, take a step back, reassess, and make minor but strategic adjustments. Whether you are still saving or retired, there are ways to protect your retirement while staying on track for long-term success.

Moreover, remember—you are not in this alone. If you ever want to exchange ideas, I'm always here to chat.

Disclosures:

This blog is for educational purposes only and should not be considered financial advice. Always consult with a financial professional before making investment decisions. Investments carry risks, and past performance is not indicative of future results.

Sources

·  Vanguard on portfolio rebalancing: https://investor.vanguard.com/investor-resources-education/portfolio-management/rebalancing

·  Fidelity study on staying invested during downturns: https://www.fidelity.com/viewpoints/market-and-economic-insights/staying-invested

·  Morningstar on flexible withdrawal strategies: https://www.morningstar.com/articles/1135151/how-to-choose-the-best-retirement-withdrawal-strategy

·  Social Security Administration on delaying benefits: https://www.ssa.gov/benefits/retirement/planner/delayret.html

·  IRS guide to Roth conversions: https://www.irs.gov/retirement-plans/roth-ira

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