The Stock Market Is Dropping: Exactly What to Do Right Now | The Limitless Retirement Podcast

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As markets stumble, Danny offers a clear-eyed look at how retirees and pre-retirees can protect their futures. From smart portfolio adjustments to emotional discipline, he lays out practical steps for staying the course—and even finding opportunity—when volatility hits.

Key Topics:

  • Understanding Market Volatility 00:00
  • Navigating Market Crashes: A Four-Part Framework 02:52
  • Defensive and Offensive Strategies for Investors 06:09
  • Maintaining Emotional Discipline During Market Declines 09:03

How to Protect Your Retirement During a Market Crash Without Panicking

The Market Just Dropped 9%. Here's What to Do Now.

A 9% drop in the markets. A 6% plunge in a single day. If you’re feeling anxious, you’re not alone. Volatility like this triggers panic. You may be wondering: Should I cash out? Adjust my plan? Do nothing and wait it out?

Before making a move that could jeopardize your long-term goals, take a breath—and read this first.

We’re not experiencing a random blip. This crash is largely driven by newly announced tariffs disrupting global supply chains. Companies like Apple, Ford, and Nike are facing rising costs. Investors are spooked. The word “stagflation” is back in the headlines.

But here’s what matters: how you respond. Market crashes are part of the investing journey. They’re also opportunities to reposition and protect your retirement.

Key Takeaways

  • Market crashes trigger our fight or flight response.
  • The recent market drop is tied to new tariffs.
  • Fear is dominating investor sentiment right now.
  • The market has historically recovered from crashes.
  • Assess your risk exposure based on your retirement timeline.
  • Panic selling locks in permanent losses.
  • Diversification is key during market downturns.
  • Market crashes can present unique investment opportunities.
  • Emotional discipline is crucial during market declines.
  • Limit news consumption to reduce anxiety.

Let’s walk through a 4-step framework to help you do just that.

1. Assess Your Real Risk Exposure

Start by asking: How vulnerable is my retirement plan to this downturn?

  • If you’re 10+ years from retirement, this may barely affect your long-term trajectory. Historically, markets have recovered from every crash.
  • If you’re within 3–5 years of retirement or already retired, you need to act.

Action: Calculate your monthly expenses × 60. That’s your five-year safety net. Do you have that amount in cash, money markets, or short-term bonds?

If not, your portfolio may be exposed to sequence-of-returns risk—the danger of having to sell stocks in a down market.

2. Implement Strategic Defense Moves

Don’t sell everything. Panic selling turns paper losses into permanent ones. Instead, consider:

  • Rebalancing: If your original allocation was 70% stocks/30% bonds, you may now be closer to 65/35. Consider whether maintaining a slightly more conservative allocation temporarily makes sense.
  • Diversifying globally: Some international and emerging markets are holding up better under current conditions.
  • Tapping cash reserves instead of selling stocks: If you're withdrawing for retirement, draw from stable funds to give equities time to recover.

3. Consider Offensive Moves

Market downturns create unique opportunities. Don’t overlook them:

  • Tax-loss harvesting: Sell investments at a loss to offset gains or reduce your taxable income (up to $3,000 annually). Reinvest in similar—but not identical—assets to keep your strategy on track.
  • Roth conversions: Convert traditional IRA assets while values are down. You'll pay taxes on a smaller balance and enjoy tax-free growth later.
  • Dollar-cost averaging: Have cash on the sidelines? Invest smaller amounts steadily over the next 3–12 months. This cushions risk and ensures you don’t miss the rebound.

4. Maintain Your Discipline

More than anything, staying calm is the key to long-term success.

Here’s how to stay grounded:

  • Check your portfolio less often. Frequent monitoring fuels anxiety and reactive decisions.
  • Limit financial news consumption. Headlines are written to drive clicks, not informed investing.
  • Review your retirement plan. If it's well-designed, it already factors in market crashes.

History shows those who stay invested fare better than those who bail out. Consider March 2020: The S&P 500 fell 30% in weeks, then rebounded sharply. Those who held on recovered quickly. Those who sold missed the upswing.

Warren Buffett said it best: “Be fearful when others are greedy, and greedy when others are fearful.”

Conclusion: A Crisis Is Also a Test—and an Opportunity

This crash won’t be the last one. But how you handle it could define your retirement success. By reassessing your risk, making smart defensive and offensive moves, and sticking to a sound plan, you can weather volatility and come out stronger.

*This blog post is based on the insights shared by Gudorf Financial Group. For personalized advice tailored to your unique circumstances, always consult a financial, legal, or tax professional.*

Transcript: Prefer to Read — Click to Open

Danny (00:00.11)

The market just dropped 9 % a few weeks ago, with Friday alone seeing a 6 % plunge. If you’re watching this video, you’re probably feeling nuts in your stomach and wondering if you should sell everything and hide under the bed or just ignore it all. I get it. Market crashes trigger our fight or flight response. But before you make any decisions, you might regret

Let me walk you through exactly what’s happening and the specific actions you should take right now to protect your retirement. What we’re experiencing isn’t just a random market fluctuation. It’s directly tied to the new tariff announcement that have thrown the global supply chains into chaos. These tariffs aim to make American goods more competitive by making imports more expensive. But

they’ve created massive uncertainty in the market. And as Warren Buffett famously says, markets are voting machines in the short term and waning machines in the long term. Right now, investors are voting with their emotions and fear is winning the day. The real issue isn’t just the terrorists themselves, it’s the uncertainty they create. No one knows how long they’ll last, whether they’re a negotiating tactic,

or a long-term policy or who will ultimately bear the cost. Companies like Apple, Ford and Nike are suddenly facing higher costs and potentially lower sales. Even worse, there’s talk of stagflation. That’s the dreaded combination of rising prices and slowing economic growth with effective tariff rates approaching 26%.

levels we’ve not seen since 1950s, it’s no wonder markets are reacting strongly. But the question remains, should you panic and change your retirement strategy? I’m going to share a four-part framework for navigating this market crash that will help you not just survive, but potentially benefit from this volatility. These four parts are number one, we need to assess your true

Danny (02:23.031)

risk exposure. Number two, need to implement strategic defense moves. Number three, we need to look for opportunistic offensive plays. And number four, we need to maintain our investing discipline. Let me break down each of these steps with specific actions that you can take today. First, you need to understand your actual exposure to this market downturn. You’re years away from retirement. This crash

likely changes nothing for your long-term plan. The market has recovered from every single crash in history, including the Great Depression, the dot-com bubble, and the 2008 financial crisis. However, if you’re within three to five years of retirement or already retired, you need to evaluate your cash reserves. Do you have enough money set aside in stable investments to cover your expenses

over the next five years without having to sell any of your stocks. That is the question you should be asking yourself. This is where your retirement becomes vulnerable by being forced to sell when markets are down. Take a moment right now to calculate your monthly expenses and multiply that by 60 months. That’s your minimum safety net. If you don’t have that amount in cash,

money market funds or short-term government bonds, you may need to make some adjustments. If you’ve determined you’re overexposed to risk, here are specific defensive moves to consider. First, resist the urge to sell everything. Panic selling is how people lock in permanent losses. Instead, consider strategic rebalancing.

If your portfolio was 70 % in stocks and 30 % in bonds before the crash, it might be around 65 % in stocks and 35 % in bonds due to those stock declines. Rebalancing normally means selling bonds to buy stocks, but in this environment, you may want to temporarily maintain a slightly more conservative allocation. Second, ensure proper diversification.

Danny (04:42.743)

International stocks are actually holding up better than US stocks during this tariff situation. Emerging markets in certain sectors may be less affected by these specific tariffs. Diversification isn’t just about having different stocks. It’s about having investments that respond differently to the same economic events. Third, if you’re taking withdrawals from your portfolio and it’s for retirement income,

Consider temporarily reducing your withdrawal rate or taking withdrawals from your cash reserves rather than selling stocks. This gives your portfolio time to recover before you need to tap into it again. Market crashes aren’t just threats, they’re opportunities. Here are three specific offensive moves that you can consider as well. First, tax lost harvesting.

If you have investment accounts and taxable accounts that have declined in value, you can sell them and realize the loss, which can offset other gains or up to $3,000 of ordinary income for 2025. Then immediately buy similar, but not identical investments to maintain your market exposure. This strategy allows you to maintain your investment position while creating

this tax benefit. The second opportunity is Roth conversions. If you have traditional IRA assets converting some to Roth IRAs during market downturns can be incredibly efficient. You’ll pay taxes on the converted amount at its current depressed value and then all future growth will be tax free. This is like getting a discount on your tax bill for the conversion. Third,

If you have cash on the sidelines, consider dollar cost averaging into the market over the next 3 to 12 months rather than investing it all at once. This reduces the risk of investing everything right before another market drop while ensuring you don’t miss the recovery, which often happens quickly without any warning. The final step is perhaps the most important. Market crashes

Danny (07:06.609)

test our emotional discipline more than our financial knowledge. And here’s how to stay psychologically strong against those market declines. First, limit how often you check your portfolio. Research shows that people who check their investments daily or weekly experience much more stress and make worse decisions than those who review it monthly or quarterly. Second, remember

that financial news is designed to trigger emotional responses. Headlines like markets in free fall or worst drop since 2008 are meant to get clicks and not help you make good decisions. Consider taking a news break if the coverage is causing you anxiety. Third, revisit your long-term retirement plan. A well-designed retirement plan accounts for these market crashes.

If you’re working with a financial advisor, schedule a call to review your plan and confirm whether any adjustments are needed. Often the answer is simple to stay the course. Historically, we’ve shown that those who panic during market crashes, fair worse than those who remain disciplined. During the COVID crash in March of 2020 markets fell over 30 % in just a few weeks.

but then recovered completely within months. Those who sold at the bottom locked in their losses and missed the recovery. Remember Warren Buffett’s advice, be fearful when others are greedy and greedy when others are fearful. Right now, fear is dominating the market. While I’m not suggesting you should blindly buy everything in sight, I am suggesting that maintaining your long-term investment discipline

is likely the wisest course of action. If you found this analysis to be helpful, please hit the like button and subscribe to my channel for more retirement planning guidance during these volatile times. Speaking of planning for market declines, I’ve created a detailed video on how to build a three bucket investment portfolio specifically designed to withstand market crashes like this one.

Danny (09:31.923)

Click the link right here, right now, or in the description below to view this video. This three bucket strategy has helped many of my clients sleep soundly at night and it might be exactly what you need right now to protect your retirement from this market volatility.

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