If you’ve ever been on a roller coaster, you know that slow climb to the top is kind of fun, until the bottom drops out. That’s exactly how the stock market feels sometimes. You’re cruising along, enjoying steady gains, maybe even feeling a little smug about how your investments are doing. And then wham, the Dow drops 800 points in an afternoon, and suddenly you’re wondering if you should start hoarding canned soup. Sound familiar? There are some urgent facts you should know.

I’ve been there, I’m sure you have as well. More than once. The truth is market crashes happen. They’re not rare, one-off events; they’re part of the natural rhythm of investing. The problem is, when you’re retired, you don’t have the luxury of waiting twenty years for the next bull market to bail you out. Protecting your retirement savings from a crash isn’t about avoiding all risk, it’s about being prepared so a downturn doesn’t wreck your golden years.

Let’s talk about how to do exactly that.

Don’t Keep All Your Eggs in the Same Basket (Or Even in the Same Kitchen)

You’ve heard it before: diversify, diversify, diversify. But here’s the thing, real diversification isn’t just owning ten different mutual funds. If all ten funds are tied to the same part of the market, you’re not actually diversified. You’re just wearing ten hats in the same rainstorm.

In retirement, I like to think of diversification as spreading your assets across different types of investments, stocks, bonds, cash, real estate, maybe even some commodities. That way, when one part of the market takes a nosedive, the others might still be holding steady.

And yes, that means resisting the temptation to “go all in” on that hot stock tip from your brother-in-law who’s been wrong more often than the weather forecast.

Keep a Healthy Cash Cushion

Here’s a little retirement math for you: if the market drops 20% and you have to sell investments at those lower prices to pay your bills, you’re locking in those losses forever. Ouch.

That’s why having a cash cushion, at least 12 to 18 months of living expenses, is so important. This money is your “sleep well at night” fund. If the market tanks, you can live off your cash instead of selling investments at bargain-bin prices. That’s never a good plan for your finances.

Think of it like having an emergency chocolate stash in the pantry, you hope you don’t need it, but when you do, you’re glad it’s there.

Adjust Your Withdrawal Strategy

If you’re pulling a steady 4% a year from your portfolio, that might work fine in stable times. But when the market takes a hit, blindly sticking to that same withdrawal rate can drain your savings faster than you think.

Consider a flexible withdrawal strategy, where you reduce your spending a bit in bad years and loosen the purse strings in good years. This isn’t about living like a monk; it’s about making sure your money lasts as long as you do.

A simple rule I follow: when the market drops, I ask myself, “Do I really need this expense right now, or can it wait until things recover?” That one question has saved me thousands over the years.

Revisit Your Risk Tolerance (Honestly)

I meet a lot of retirees who tell me, “Oh, I’m fine with market swings,” but they’re also checking their account balance three times a day and losing sleep over CNBC headlines. That’s not “fine.”

If a 15% market drop makes you panic, it’s a sign you might have more in stocks than you can stomach. There’s no shame in adjusting your portfolio so you can sleep at night. Retirement isn’t about impressing anyone with your investment risk,it’s about enjoying your life without constant money anxiety.

Keep Some Growth in the Mix

Here’s the tricky part, while you want to protect your savings, going too conservative can be just as dangerous. If you dump everything into ultra-safe investments like CDs, you might protect your principal, but inflation will slowly eat away your purchasing power.

The goal is balance: enough safe investments to protect against short-term losses, and enough growth-oriented assets to keep your money working for the long haul. Think of it like making chili, you need a little spice for flavor, but not so much that it burns your tongue.

Have a Plan Before the Crash Hits

The worst time to make investment decisions is in the middle of a panic. Have a plan now ,  decide how much you’ll keep in cash, what your withdrawal strategy will be, and what you’ll do if the market drops 10%, 20%, or even 30%.

When you already know your playbook, you’re less likely to make an emotional decision you’ll regret. I call it “financial muscle memory”, the more you practice it in your head, the more automatic it becomes when it matters.

Remember: This Too Shall Pass

Markets recover. They always have. The headlines will scream doom and gloom, but if your retirement plan is built to handle bad times as well as good, you can tune out the noise and enjoy your morning coffee without heart palpitations.

I can’t promise the market won’t crash again, in fact, I can promise it will. But with the right preparation, you can ride out the storm and keep your retirement dreams intact.

Final Thoughts
If you’re feeling uneasy about the next market downturn, or if you’ve already felt the sting of one, you don’t have to navigate it alone. In my book, Surviving Financial Crises in Retirement, I walk you through practical steps to protect your savings, reduce stress, and keep your retirement on track even in the toughest times.

Get your copy today, and plan ahead: