Weathering the Storm: How to Handle Bear Markets Based on Your Age and Stage
Market downturns are a fact of life—just like taxes, birthdays, and awkward holiday dinners. The question isn’t whether bear markets will happen (they will), but how to handle them in a way that protects your long-term financial health.
In Episode 116 of Last Paycheck, CERTIFIED FINANCIAL PLANNER® professionals Rob and Archie Hoxton walk listeners through how to think about market drops differently depending on where you are in your life journey. Here’s what they had to say.
Bear Markets in Early Career: Buy the Dip, Don’t Fear It
When you’re in your 20s or 30s, volatility can actually work in your favor. You’re buying shares at a discount during bear markets, which boosts long-term returns. But many young investors fall into the trap of viewing portfolio balances like bank accounts—when values drop, they panic and stop contributing.
Don’t make that mistake.
The Hoxtons recommend staying the course (or even increasing your contributions if possible) during down markets. Think in terms of share count, not account balance. This mindset shift can turn market dips into long-term gains.
Mid-Career: Stay the Course, Even While Catching Up
If you’re in your 40s to early 60s and still accumulating wealth, bear markets can feel riskier—especially if you’re behind on retirement savings. But the key lesson remains: keep contributing. Don’t let temporary declines derail your long-term strategy.
It may also be time to start refining your asset mix—adjusting the stock/bond ratio and increasing your emergency fund to reduce your emotional reaction to market swings.
Early Retirement: Flexibility Is Power
In the decumulation phase (the early years of retirement), bear markets are trickier. You may need to sell shares for income—but if markets are down, that means selling more shares to get the same dollar amount.
To reduce this risk, Rob and Archie recommend:
- Holding 6–12 months of expenses in a “secure bucket” (cash, CDs, etc.)
- Reducing spending temporarily during a downturn
- Keeping your lifestyle scalable so you can pause discretionary expenses if needed
This flexibility can make the difference between staying on track and running into trouble.
Late Retirement: Don’t Go 100% Conservative
While it’s common to shift toward more conservative investments with age, Archie warns against becoming too conservative late in life. You may still need growth to fund longevity, healthcare costs, or legacy goals.
The right ratio of stocks, bonds, and cash depends on your personal needs—but don’t assume 100% bonds is the right choice at 85. Growth still matters.
The Bottom Line: Have a Plan
Ultimately, your success in navigating bear markets depends on having a well-thought-out financial plan. With a strategy that considers your time horizon, income needs, and psychological tendencies, you can avoid costly mistakes and turn downturns into long-term opportunities.