Retiring in 2026? Do This to Protect Yourself From a Market Crash.

Key Points
You may be worried about retiring at a time when there's economic uncertainty on the home front and tensions overseas.
A stock market crash early on in retirement could spell trouble long term.
Having a few years of expenses in cash could help you avoid locking in losses as a new retiree.
- The $23,760 Social Security bonus most retirees completely overlook ›
Taking the plunge into retirement can be a daunting prospect in the best of times. But right now, it may feel especially scary.
Not only is there general economic uncertainty, but the Iran conflict could have a huge impact on living costs and stock values. If oil prices continue to climb, consumer prices could soar on a whole. And if tensions aboard and economic fears cause investors to feel skittish, it could lead to a stock market sell off.
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That doesn't mean retiring in 2026 is guaranteed to be a disaster, though. If you're set on retiring this year, there's an important move you can make to protect your retirement savings from a stock market crash.
Boost your cash reserves
During retirement, it's a good idea to keep your IRA or 401(k) invested in the stock market -- at least partially. You want that money to keep growing so it's able to keep up with, or ideally outpace, inflation.
Still, it's generally a good idea to keep a year or two of living expenses in cash as a retiree. That way, if there's a market event and your portfolio loses value, you can avoid tapping your investments and locking in losses.
Given today's climate, you should especially make sure to have a decent pile of cash on hand. You may want to give yourself two to three years' worth of living expenses if you're retiring this year. And it's not necessarily because a near-term stock market downturn is guaranteed to be lengthy.
Rather, it's a good idea to stockpile extra cash because the start of retirement can be an adjustment mentally. And seeing your portfolio lose value early on in retirement could drive you to make rash decisions that hurt you in the long run. If you have extra cash on hand, it may be easier to take a deep breath, ignore your portfolio temporarily, embrace your new routine, and wait for a stock market recovery.
Make sure your asset allocation makes sense
In addition to boosting your cash reserves, it's important to make sure your asset allocation is appropriate for your circumstances. While you definitely don't want to dump your stocks completely, you also don't want to load up too heavily on stocks since they tend to be volatile.
You may want to land on a roughly 50/50 split between stocks and bonds, though that decision should hinge on your tolerance for risk, age, portfolio income needs, and other goals. Between a proper asset allocation and plenty of cash, you can set yourself up for a successful retirement -- even if it might seem like you're ending your career at the worst possible time.
The $23,760 Social Security bonus most retirees completely overlook
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