Responding to retirement account ups and downs

If the last few years have taught us anything, it’s that life is unpredictable. And that holds true for your financial life, as well. Based on what you hear on the news or read in your retirement account statements, you could be feeling really good about your financial situation one day and filled with worry the next.

For example …

In March of 2020, the S&P 500 lost 645 points in 13 days, then gained 995 points over the next two and a half months. More recently, the same market index rebounded 693 points between mid-March and mid-July 2023, after losing 712 points between mid-August and the end of September 2022.

Dealing with volatility

The example above is a perfect illustration of market volatility, defined as frequent, dramatic price movements, either up or down. While market volatility is unsettling, it’s important to remember that it’s a normal part of investing. And the worst thing to do when you experience volatility is to panic. Instead, experts recommend focusing on these approaches:

  1. Diversify – Having a diversified portfolio means investing in different types of assets, including stocks, bonds, and cash equivalents. Within those general categories, there are additional ways you can diversify, such as small-cap or large-cap equity funds, value or growth equity funds, short-term or long-term bond funds, and domestic or international investments, to name just a few. The goal is to have a mix of assets that historically haven’t risen or fallen at exactly the same time. That way, you face less overall risk during market ups and downs. Within your retirement plan, you probably have ready-made investment portfolio options that come pre-diversified based on a specific timeframe (such as your expected retirement year) or investment goal (such as growth or income). Or, you can build your own investment portfolio using individual funds available within the plan.
  2. Think long-term – From quarter to quarter and year to year, you will surely see gains and losses within your retirement account, so it’s important to stay focused on the long term and not react to short-term changes. With a well-diversified portfolio that matches your investment timeframe and/or risk tolerance, experts advise against making frequent changes to your portfolio. If you move money out of losing investments and into gaining investments — trying to chase the next hot trend — you’re actually doing the opposite of what you should do, which is to buy low and sell high, as the next tip explains.
  3. Look for opportunity – Think of quality stocks that have fallen in price as being “on sale” — you’re able to purchase them for less, giving you greater potential to make money on your discounted investment if share prices rebound. This is one of the reasons why experts recommend regularly rebalancing your portfolio. As certain funds gain value and others lose value, your portfolio will become skewed from its original design. Rebalancing sells off the high performers and reinvests in the lower performers — ensuring your investing strategy remains on track and you take advantage of market opportunities. Keep in mind that most ready-made portfolios are automatically rebalanced so you don’t have to do anything. If you build your own portfolio, you can turn on automatic rebalancing to make this step effortless.
  4. Keep cash on hand – Because your retirement account is intended for long-term investing, make sure you also have a savings account you can turn to when you need some extra cash. Having this money available can provide some peace of mind when your investments experience volatility. The closer you are to retirement, the more cash on hand you may want to have so that you’re not forced to dip into your investments during a low point in the market.

The bottom line

While it can be scary to see large — or even small — losses in your retirement account, keep in mind that market volatility is a normal part of investing. Remember not to panic, check that your account is well diversified, and focus on the long-term. It also helps to have an emergency savings account available. Following these tips will help you ride out market ups and downs like a pro!


“Protect Retirement Money From Market Volatility,” by Daniel Kurt, Investopedia (, June 2, 2022
“S&P 500 – 10 Year Daily Chart,” macrotrends (
““What Is Market Volatility—And How Should You Manage It,” by Kate Ashford, Forbes Advisor (, February 13, 2023