If a Recession Is Coming, These 3 Common Retirement Mistakes Could Cost You Big Time

Around 8 in 10 Americans are at least somewhat concerned about a recession, a December 2025 survey from financial association MDRT found.

If you're on the path to retirement, a recession or bear market could throw a wrench in your plans. While economic conditions may be out of your control, avoiding these three common mistakes could help protect your nest egg against potential volatility.

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Mistake no. 1: Withdrawing your savings

It can be tempting to pull your money out of the market if you're concerned about a recession. However, that can sometimes do more harm than good.

The market has been especially unpredictable in recent years. In June 2023, for example, analysts at Deutsche Bank predicted a "near 100%" chance that a recession would begin within the next 12 months. Nearly three years later, that recession has yet to materialize.

Even the experts can't say what will happen with the market in the short term. If you withdraw your savings now and the market continues to thrive, you could miss out on substantial growth.

Mistake no. 2: Pressing pause on investing

On a similar note, pausing contributions to your retirement fund can also be a risky move. It's an understandable strategy, especially considering how expensive stocks are right now. But time is your most valuable resource when saving for retirement, and every year counts.

For example, say you're investing $200 per month for retirement while earning a modest 8% average annual return on your investment.

If you invest for 40 full years, you'd accumulate around $622,000 in total. But if you cut your contributions short and invest for only 39 years, your total savings would amount to about $573,000. In other words, stopping investing just one year earlier could cost you around $49,000 in earnings in this scenario.

Mistake no. 3: Not considering your asset allocation

Asset allocation refers to how your investments are divided within your portfolio, typically between stocks and bonds.

Stocks tend to be more volatile than bonds, but they also generally earn higher returns over time. When you still have decades until retirement and can afford to take on more risk, it's wise to allocate more of your portfolio toward stocks to maximize your earnings. However, by shifting toward more conservative investments as you approach retirement, you can better protect against volatility.

Your ideal asset allocation will depend on several factors, specifically your risk tolerance. But a general guideline is to subtract your age from 110, and the result is the percentage of your portfolio to allocate to stocks. So if you're 65 years old, you may want to allocate 45% of your portfolio to stocks and 55% to bonds.

Nobody can say for certain when the next market downturn will begin, but it's a good idea to prepare anyway. By avoiding these common mistakes, you can protect your retirement fund as much as possible.

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