You’ve saved for decades. You’ve planned. Now the market is volatile or even tanking right as you’re preparing to retire and leave your 9-5 job behind for good. That kind of timing can throw even the best-laid plans into chaos.

The danger here is taking money out of your retirement s when their value is down. It’s called sequence of returns risk, and it can drain your portfolio faster than expected.

You can think of it like playing Connect Four, the classic board game, says Kevin Feig, a certified financial planner and owner of Walk You To Wealth.

“There’s a sequence of gameplay that will win every time if you have the opportunity to go first,” he says. But since most people flip a coin to decide who goes first, your entire strategy is left to fate.

“That’s what retiring in a down market is like,” says Feig. “It’s out of your control and it can quickly skew the game against you.”

Retiring in a volatile or down market isn’t the end of the world — but it is a high-stakes moment. The moves you make early on will set the tone for the rest of your retirement.

So how can you level the playing field? Here are seven practical strategies to help protect your nest egg and stretch your money through a market downturn.

Learn more: How to build a financial plan for you and your family

1. Use the bucket strategy

The bucket strategy is a simple way to manage your retirement savings so you’re not forced to sell investments when the market is down.

It works by dividing your savings into three buckets based on when you’ll need the money:

“An investor will often have perhaps one to three years of living expenses in cash or very short-term bonds which are unlikely to lose any money, and perhaps another two to three years in medium-term bonds,” says Erik Goodge, a certified financial planner and founder of uVest Advisory Group.

Then, the rest of the portfolio is kept in a mix of stocks and longer-term bonds, says Goodge.

“This way, they could fund several years of living expenses without resorting to selling any equities or long-term bonds at a loss,” he says.

This gives your long-term investments time to bounce back, which is crucial. Markets don’t stay down forever — but if you start selling low, your portfolio may not recover, leaving you with fewer resources for the rest of retirement.

2. Draw from your cash reserves first

Most experts recommend keeping at least one to two years’ worth of living expenses in cash as you enter retirement. If your monthly expenses are $4,000, that’s $48,000 to $96,000 in a liquid .

Why is it important to have so much cash on hand? Because when markets tank, this cash cushion buys you time. You’ll have breathing room to wait for the rebound. Cash doesn’t grow much, but it isn’t exposed to market volatility either.

Keep in mind: This isn’t an emergency fund — you generally still want three-to-six months worth of living expenses tucked away for a rainy day. Instead, think of this cash reserve as your first line of defense against a bear market.

However, Feig says how much you should keep in cash depends on how diversified your income sources are.

“If you’re collecting Social Security, rental income and a pension, along with retirement assets, then your cash reserve can likely be similar to a traditional emergency fund of three to six months,” he says.

But if you’re primarily relying on investment income, then “ideally 24 to 36 months is recommended,” says Feig.

3. If you need to sell investments, do it strategically

Unfortunately, if your cash reserve isn’t large enough, you might need to sell investments in a volatile market. If you find yourself in that situation, do so strategically.

First, avoid panic-selling a big chunk of your portfolio. Easier said than done if you’re actively watching your retirement balance plummet day after day, but experts like Justin Pritchard, a certified financial planner at Approach Financial Planning, say it’s crucial to keep a cool head.

“When your investments are down, selling locks in losses, and you can potentially run out of money sooner,” he says. “Every withdrawal takes a bigger bite out of your portfolio than it would take if the market was rising.”

For example, you might need to sell 25 shares to generate $1,000 instead of selling 15 or 20 shares.

“You deplete your holdings faster, making it less likely that your money will last for your life,” says Pritchard.

Instead, tap your most conservative holdings first — typically bonds or bond funds. These usually lose less value during downturns. If you’re forced to sell stocks, consider harvesting tax losses at the same time to offset capital gains elsewhere.

4. Consider a Roth conversion

A down market isn’t optimal, but some experts consider it an ideal time to do a Roth conversion — moving money from a traditional IRA or 401(k) into a Roth IRA. You’ll be subject to income taxes on the amount converted now, but future withdrawals will be tax-free.

If you convert when the market is down and values are low, you’ll pay taxes on a smaller amount, and when the market recovers, all that growth happens inside your tax-free Roth.

A Roth conversion isn’t for everyone, and it can potentially bump you into a higher tax bracket. But for people in a lower-income year (like early retirement), it can be a beneficial long-term strategy. Talk to a financial advisor or a tax professional to make sure it fits your situation.

Get matched: Find a financial advisor who can help you maximize your investments

5. Get cash payouts instead of reinvesting dividends

During the accumulation phase of your career, reinvesting dividends makes sense because you’re building your portfolio. But once you’re retired and drawing income, take your dividends in cash — especially in a more volatile market.

This gives you a built-in income stream without having to sell anything. If your portfolio pays out 2 to 4 percent annually in dividends, that could cover some of your living expenses. It’s not a full-income strategy, but it reduces how much you need to withdraw from other assets during a market slump.

6. Delay big discretionary expenses

Most of these cheat codes deal with investing, but the truth is, if you can hold off on large, optional purchases during high market volatility, you can reduce how much money you need to withdraw in the first place.

“If you adjust your spending to market movements, you can make your money last longer,” says Pritchard.

It might sound like common sense, but it works. Big expenses early in retirement can compound sequence risk, especially if you’re funding them by selling investments at a loss.

Some retirees even take a temporary “pay cut” from their portfolios during downturns — living on less until things recover.

“Of course, you need to be able to live comfortably, so if things are already tight, there might not be much room for adjustment,” says Pritchard.

7. Meet with a financial advisor

A market downturn isn’t the time to DIY with your retirement plan based on headlines or hot takes. When markets are volatile and your income is no longer coming from a steady paycheck, speaking with a trustworthy financial advisor is a smart move.

A fiduciary financial advisor can help you:

  • Set up or refine your bucket strategy.
  • Analyze your withdrawal rates.
  • Minimize taxes by strategically selling assets.
  • Keep your emotions in check.

Financial advisors aren’t just for the wealthy, either. Many work on a flat fee or hourly basis. So for $200-$400, you can meet to review your portfolio, assess your game plan and ensure you’re on track. The right advisor can help you avoid costly mistakes — and that’s usually worth more than their fee.

Get started: Match with an advisor who can help you achieve your financial goals

Bottom line

Retiring during a more volatile market isn’t ideal, but it’s not a disaster either. With the right strategies — like using a bucket system, keeping plenty of cash and carefully managing withdrawals — you can protect your retirement savings. Combine that with expert guidance and smart timing on big expenses, and you can still enjoy the retirement you’ve worked so hard for.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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