It’s not a matter of if, but when.

The United States will have another recession. The question many people are wondering is: Will the economic downturn be mild or brutal?

The Great Recession, which lasted from December 2007 to June 2009, was harsh. People lost their homes. Many investors bailed from the stock market after experiencing devastating drops in the value of their retirement accounts.

“In the worst recessions, the stock index has been slashed in half. In others it only slipped a few percentage points,” Andrew Van Dam, who covers data and economics for The Washington Post, pointed out recently.

Read: A recession will come. How bad will it be?

In October 2018, the Dow Jones industrial average declined nearly 1,400 points in just two days. By the end of the year, things looked bleak.

Read: All three market indexes finish 2018 in the red

And then at the beginning of 2019 the market roared back — again.

Read: That was an awful December in stocks — followed by one of the best Januarys ever

Based on past performance of the stock market, by giving it time and waiting — if you can afford to do so — you’ll very likely recover the losses. The key is not to panic.

“At the market’s close on March 9, 2009, U.S. stocks had fallen a stomach-wrenching 57 percent from their Oct. 9, 2007, peak, as measured by the Standard & Poor’s 500 and the Wilshire 5000 indexes,” The Washington Post’s Allan Sloan wrote last year on the ninth anniversary of the day in 2009 when the U.S. stock market hit bottom. “For those of us (including me) who had large parts of their net worth tied up in stocks, it was a really scary time. But those of us who didn’t bail out have been rewarded. Richly. That decline, the second-steepest since 1932, has been followed by the second-longest bull market.”

But that was then, you may argue. Things are different, you worry. If you’re watching the value of your 401(k) swing up and down and that’s the money you need to live off in retirement, telling you to not panic seems insensitive to your reality.

I’ve been receiving a lot of email from people who are retired or close to leaving the workforce for retirement. They feel they don’t have the time to lose money and then wait for a recovery.

To address these concerns, Dan Egan, the managing director of behavioral finance and investing at online financial adviser Betterment, agreed to answer some questions and respond to reader comments about the current market turmoil. By the way, Egan has spent his career using behavioral finance to help people make better financial and investment decisions.

Q: How are current retirees supposed to deal with the current market turbulence and alarm that a recession is coming? Is there anything we can do, or do we hope to ride it out?

Egan: Your retirement plan should work regardless of what the market is doing. If what the market did or might do is the make or break of your retirement plan, I’d look at other ways to shore up your plan such as working longer, part-time work, or Social Security optimization. I don’t believe anyone has a crystal ball that can tell you when [the stock market] is about to go up or go down, so you have to take on the level of risk that’s appropriate for the future, and not be constantly revisiting your ‘plan’ whenever the market is in the news.

So what should you do? Talk to someone about including the worst-case scenario in your plan, figure out what works. And then stop paying attention to market news. All it does is give you ulcers and stress and doesn’t help you manage your portfolio better. Imagine if someone was constantly telling you there might be an earthquake tomorrow: They aren’t wrong, but they don’t know if or when, so stop paying attention to them. The news wants your attention, not your retirement success.

For help in finding a financial adviser, read:

10 important steps to take before hiring a financial adviser

Do you need a financial adviser?

Are you sure your financial adviser is legit? Here’s how to tell.

Q: I WAS trying to retire in 2022. Do you recommend I move it all into my IRA’s money market account to protect myself from losses I can’t ever recover? If not, why not? Seems smarter to sit on $800,000 and enjoy no growth at all while the market crashes than lose $300,000 without time to get it back.

Egan: I have no idea what the bond market or stock market will do in the short term, so I can’t give you any advice here. Except to match the above. A good retirement plan means you don’t care about what happens in the market. You should spend your retirement doing fun, fulfilling things, not watching financial news and stressing about markets.

For age-based investment advice no matter what the market is doing read: I feel you about the stock market swings

Following a recent column on people fleeing to bonds for safety, a number of readers played Monday-morning quarterback. They think they know better than the financial experts. (They usually don’t.) Anyway, I asked Egan to address their comments.

Read: Despite recession fears, moving all your money from stocks to bonds is a bad idea if retirement is a long ways off

Comment: People moving to bonds right now are not planning to leave them there indefinitely. They are protecting their principal and planning to buy back into stocks after the market crashes.

Egan: If they believe they can effectively time the market like this, they should start a hedge fund . . . and not even worry about retirement. Most investors buy high and sell low for the exact reason that they’re making decisions based on greed and fear, rather than math.

Comment: I worry about people taking as gospel the assertion that stocks always outperform bonds in the long term. It really depends on when you get in and out. You can find many 10-year periods where bonds outperformed stocks.

Egan: It’s true, life isn’t black and white, it’s gray. But the reason we pay attention to certain things (black swans, man biting dog, shark attacks) is because they are rare. You still need to make decisions about the future based on odds, and odds are good stocks will outperform. Not 100 percent, but pretty good.

Read: As stocks go wild, here’s what should you do if you’re retired

Comment: If you are concerned about inflation risk, one vehicle to consider is the I-Bond issued by the federal government.

Egan: That is true.

(U.S. Series I savings bonds is a low-risk savings product issued by the U.S. Treasury. Investors earn a combination of a fixed interest rate and the rate of inflation.)

Comment: If you take your money out of the market and park it, you’re going to lose the run-up afterward. The numbers indicating the value of your holdings are just numbers — until you sell and lock in those numbers. People who panic at a downturn and sell are shooting themselves in the foot. They’re making their paper losses real.

Egan: True.

Read: Want to be a 401(k) millionaire? Here’s what it takes.

Comment: (One reader objected to the advice for investors not to panic and to stay the course): Again, all of that is the sage advice that applies during times of normal market volatility. I’m afraid this time it’s different. If I had been about to retire in 2007 when the wild swings started and we all discovered what an inverted yield curve was, I would have plopped it all in a money market fund, and if I’d lost the early gains of the rebounding market, too bad; I’d still have reentered the market with what I had in 2007 while everyone else lost a LOT of money.

Egan: You know there’s a saying that “the four most dangerous words in investing are ‘this time is different.' ”

It’s really difficult to overcome hindsight bias. Now, we have the visceral feeling of not knowing what will happen. I’ve been hearing bear market calls for literally the past 10 years. They’ll be right eventually, but will it even matter by then?

Agreed, your plan and investments shouldn’t depend on whatever the market is doing.

Read: A Wharton professor puts stock market plunges in perspective

Comment: If you’re close to retirement, your portfolio should already have been rejiggered to a more conservative mix of bonds vs. stocks but not 100 percent bonds, as the rate of return would be too low to fund a 30-year retirement. Never make a portfolio adjustment rashly in the wake of one or two bad days in the stock market. There have been many, many studies proving that average Joes like you and I cannot time the market and end up baking in the loses when we panic and move funds into money market funds.

Egan: This person gets it. I 100 percent endorse this message.

Egan joined me as a guest on my recent online discussion. Read the transcript and view his answers to the following questions:

Q: If you’re an investor in bonds, doesn’t the market downturn help you?

Q: There is wide range of opinions about how to allocate assets during retirement, ranging from mostly bonds to as much as 60 percent stocks/40 percent bonds. During what might be 25 or 30 years post-work, retirees need to at least protect their principal and keep pace with inflation, but they also hope for some growth. Any thoughts?

Q: I am 10 to 12 years from retirement. I assume I should not panic about the state of the stock market and just ride it out. At what point should I start considering major adjustments (five years before retirement?)? Also, is there a rule of thumb about how much money should be liquid once I retire? I’ve read that some retired people keep five to 10 years of living expenses outside the stock market.

Your Thoughts

Are you planning to make a move based on the recent movements of the stock market? Send your comments to In the subject line put “Stock Market Plans.”

Retirement Rants and Raves

I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?

If you haven’t retired yet, what concerns you financially?

You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

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