Bear Market Survival Guide: Smart Moves Every Retiree Should Make

History tells us that a bear market is coming. However, it doesn't tell us when. Since the end of World War II, a new bear market has occurred roughly every 3.5 years, on average -- and with an average length of 9.6 months. Still, that doesn't mean they don't make an impact.

If you're retired and on a fixed income, navigating a bear market can be a challenge. However, with careful planning, you can get through the storm -- and even find opportunities to grow your portfolio. Here are some of the moves you should consider during the next bear market.

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Maintain a cash reserve

Before there's even a hint of a bear market, take time to add up the cost of your essential expenses, including housing, transportation, food, insurance, and healthcare. Don't worry about non-essentials like hobbies, dining out, or travel. Right now, the focus is on how much money you absolutely need to get by during a bear market.

Once you have that number, subtract any guaranteed income sources, such as Social Security, pensions, annuities, or rental property. Let's say your essential expenses cost $5,000 per month, and your guaranteed income totals $3,000. That leaves a $2,000 gap to fill.

This is where a cash reserve comes in. If you pull that $2,000 from an investment account during a bear market, you'll be forced to sell assets at a discounted price. However, a cash reserve allows you to avoid that hit. Keep that cash in an interest-earning account that's easily accessible when you need it.

Avoid the stampede

One of the most detrimental things you can do during a bear market is panic-sell. Acting on emotion often leads to poor investment decisions. Instead of selling, remain calm and stick to your long-term strategy.

Take a fresh look at your portfolio

One of the wisest things to do during a bear market is to evaluate your asset allocation to ensure it still aligns with your goals and risk tolerance. You may consider focusing on income-generating assets such as dividend-paying stocks, dividend-paying ETFs, or bonds -- a shift that can provide a cushion during market downturns.

While bear markets may feel daunting, you can take comfort in the fact that they're a normal part of the economic cycle. And if you find yourself worrying, consider this: Roughly 42% of the S&P 500's strongest days over the past two decades have occurred during a bear market. Those who stayed in the market were the ones who profited.

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