Apr 10, 2025
Some experts suggest that you save 10 times your salary before retiring. Those who retire at a young age want to be especially sure they have a big enough nest egg so their money will last.
If you're 60 and retired with seven times your salary invested in stocks and four year's worth of cash, you may be in a tough spot. That's because you're likely to rely on your savings as your sole income source for a few years before you draw from Social Security.
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You may also be concerned as the market has taken several steep dives as President Donald Trump's aggressive tariff policies take effect. So, can you survive a Trump-triggered downturn by relying on cash without panic selling your stocks? And what should you do to ensure your retirement funds are kept safe?
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Recovery data
The first thing to know is that it's a given market downturns happen — along with recoveries. The timeline for a crash and recovery can vary based on many factors, though, including asset class and overall economic conditions.
Morningstar published data from 1990 to 2022 showing recovery times across different asset categories. The large-blend category of assets, for example, bounced back after an average of around six months through 49 recovery cycles. This includes things like S&P 500 index funds. Do keep in mind, however, history is not a guide to the future. It's possible that it could take longer, with maximum recovery times taking years, as Morningstar's data shows, but typically it doesn't take anywhere near that long in most categories.
Some keys to limiting your risk and making sure you can withstand some bad economic news:
- Diversify: Avoid putting all your eggs in one basket to maximize the chances some assets will perform well even as others perform poorly
- Buy assets you are OK holding long-term: Don't invest in anything you wouldn't want to hold through a market crash
- Expose yourself to the right level of risk: You should have more of your money in safe investments like bonds as you get older
If you have the right investments, even if Trump's actions do lead to a market crash, you should feel somewhat stable — especially with four years of cash to live on if you need to put off selling stocks to avoid locking in losses.
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The right asset mix
Maintaining the right mix of assets is one of the most critical things to do to make your money last. A financial adviser can help you understand your risk tolerance. You can also use a simple rule of thumb to decide what percentage of assets should be in the market by subtracting your age from 110. So, at 60, you'd have 50% of your wealth in equities.
Beyond just being invested, though, you should also take some general steps to ensure a secure future, including:
- Choosing a safe withdrawal rate so you don't drain your accounts too quickly with large withdrawals
- Living on a budget so you understand where your money is going and avoid unnecessary spending
- Understanding tax rules so you can make strategic choices, such as ensuring you've owned the investments in your taxable brokerage account for at least a year before selling to take advantage of long-term capital gains rules
- Choosing Social Security at the right time, which can mean delaying benefits up until age 70 to get the maximum monthly payment
- Maintaining an emergency fund and having cash reserves set aside in case of unexpected events
- Choosing the right health insurance to supplement Medicare, which becomes available at age 65, and keep costs down
If you are responsible with these money decisions, a market crash is less likely to derail your retirement security.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
