This can be a scary time for those who have never lived through a market crash. But young people and those still in the accumulation phase will eventually come to realize that lower prices are a good thing for new savings.
For those approaching retirement or already in retirement a market crash poses an even greater threat, especially for those who weren’t prepared in advance.
For those who are unprepared, many may be forced to work longer. Others may have to cut back on their lifestyle. A lot will depend on how long this takes to play out.
But a bear market doesn’t have to be the end of the world. Bear markets should be incorporated in every financial plan because sometimes stocks go down a lot.
You just may have to be more thoughtful about how you spend down your portfolio, your assumed inflation rates, how much you spend early on in your retirement years, and your withdrawal rates.
The people who are panicking the worst are those who have no retirement plan in place. If you have a plan you’re ahead of the game. I’ll have more to say about this in the future but here are some thoughts I put together at Fortune in a recent column.