If you’ve followed the financial news for any length of time, you know the U.S. stock and bond markets travel a bumpy road. Sometimes they're on a strong and steady climb for years. Other times they take dramatic nosedives, seemingly overnight.

For someone in their 30s, market dips are unsettling, but often recoverable. But if you’re nearing or just entering retirement, they have bigger implications. If market losses happen early in retirement when you're withdrawing money from your portfolio, your savings can shrink faster. This makes it harder to recover, even if the market bounces back later, and can negatively impact your long-term financial security. This is called the sequence of returns risk.

“Market volatility, bear markets, and recessions can all take a large bite out of retirement portfolios just when future retirees need stability most,” said Cathy Marasco, Vice President for Nationwide Protected Retirement.

Even a single bad year early in retirement can shrink a person’s nest egg enough to affect their income for decades,” Marasco said.

In some cases, steep losses suffered during market downturns could mean having to delay retirement. But fortunately, there are ways to manage this risk. The strategies below can help you protect your retirement savings and smooth out future cash flow, no matter what the markets do next.

7 strategies to safeguard your retirement nest egg

1. Look for ways to reduce your spending

Living frugally can help you channel more money into your retirement savings, and a dollar you don’t spend is a dollar that can keep growing. Start with a simple, honest look at where your money goes:

• Track your expenses: Monitor your spending for two or three months by keeping a close eye on your bank and credit card statements. You can also download a budgeting app to make tracking easier.  
• Separate needs from wants: Housing, utilities, food, prescriptions, and insurance are essential expenses. Fancy restaurant dinners, designer golf bags, and pricey weekend getaways are not.
• Trim the “nice-to-haves”: This might mean making tasty meals at home instead of dining out, negotiating a cheaper phone or internet plan, or canceling those subscriptions you signed up for but don’t use. Even small changes add up—$150 a month saved is $1,800 a year not withdrawn from your portfolio during retirement.
• Downsize (and save the difference): Is your current home bigger than what you need? Consider moving to a smaller dwelling now instead of waiting until retirement. Provided it makes financial sense to sell your home, downsizing can help you greatly reduce the cost of your mortgage/rent, utilities, insurance, and maintenance.

The goal of budgeting is to lower the income your savings must generate when you retire. This makes it less likely you’ll need to take risky withdrawals during a market downtown. Explore 10 smart budgeting tips for older adults.

2. Reduce stock exposure as you age

Stocks historically outpace inflation, but they also swing the most wildly. As retirement nears, consider shifting a portion of your portfolio into steadier assets such as high-quality bonds, Treasury bills, or stable‐value funds. Three simple tools make this easier:

• Target-date funds automatically rebalance your assets as you approach your chosen retirement year, taking the guesswork out of reallocation.
• A balanced portfolio strategy mixes stocks and bonds (e.g., 60% stocks/40% bonds) to balance growth potential with lower risk. The exact mix depends on your age, risk tolerance, and other income sources, so consult a financial professional instead of relying on one-size-fits-all rules.
• A managed account option has a professional managing your assets based on both your age and risk tolerance. 

3. Keep a cash reserve or emergency fund

One of the smartest shields against volatility is a cash cushion of three to six months’ worth of expenses to cover your mortgage, food, utilities, and other basics (and if you can stash away more, even better). Keep this money in a savings account or money-market fund. If the market drops, you can pay bills from cash instead of selling investments at a loss, giving your portfolio ample time to recover.

How to fund it faster: Direct any extra money—tax refunds, cash gifts, side-gig income, or work bonuses—straight into savings until it’s fully funded.

4. Have a practical withdrawal strategy

How much should you plan to take out of your retirement savings each year? A popular starting point is the “4% rule”—withdrawing about 4% of retirement assets in the first year and adjusting for inflation thereafter.

But the 4% rule is only a guideline; everyone’s situation is different. That’s why it’s a good idea to:

• Work with a financial adviser.  Find out how you can tailor your financial strategy to your portfolio size, health outlook, and legacy goals.
• Stay flexible. If markets fall sharply, you can consider trimming your withdrawals temporarily, so your principal has time to rebound.

Automating monthly transfers from your investments to checking can also help you stick to a disciplined payout schedule during retirement (instead of making spur-of-the-moment withdrawals).

5. Delay Social Security (if possible)

Claiming Social Security at 62 feels tempting, but it comes at a cost. You could see up to a 30% reduction in lifetime benefits compared with waiting until full retirement age (currently 66-67 for most people). Each year you delay past full retirement age boosts your check by roughly 8% until you reach age 70.

If you can cover expenses through part-time work, savings, or a spouse’s income for a few extra years, you might consider delaying Social Security. This move can lock in higher, inflation-adjusted income for life, which provides a solid buffer against market tumbles.

6. Review and rebalance regularly

Reaching your financial goals for retirement requires more than a “set it and forget it” approach to investing. Your portfolio should evolve with your life and market changes to stay aligned with your goals. This is why it’s important to schedule a portfolio check-up each year, whether you do it on your own or with the help of a financial professional:

1. See where your investments currently stand. If you have multiple investment accounts, download your latest statements to ensure you’re using the most current information.
2. Assess how your portfolio matches your original asset allocation. Your asset mix should match your comfort level and how long you plan to invest. If you're nearing retirement, you have a shorter time horizon and therefore want to focus on lower-risk assets.
3. Consider rebalancing your portfolio, which means buying or selling investments to keep your asset mix aligned with your risk tolerance, preferences, and objectives. There are several rebalancing strategies you can use. It’s good practice to rebalance your portfolio once a year.

7. Consider a lifetime income fund

Even with careful planning, market turbulence right before or soon after retirement can derail well-laid plans. Lifetime income funds are designed to create a “safety net” of guaranteed income that isn’t tied to market swings.

What is a lifetime income fund? It’s a target-date fund or balanced fund available in some employer-sponsored 401(k), and 457(b) plans. It might also be available through a managed account provider if they offer this type of fund within their product line-up.

Beyond investment growth opportunities, a lifetime income fund does what it says: it generates retirement income that lasts a lifetime. That's because it includes an annuity component—a financial product designed to provide reliable, stable monthly payments for the rest of your life. A lifetime income fund periodically captures the fund’s highest value and bases your future income payments on this amount. This feature protects your income from a potentially damaging market downturn, especially right before retirement.

Other options for protected retirement income—such as fixed annuities or Social Security “bridge” strategies—may also be worth considering. A qualified financial adviser can help you weigh the pros and cons of these options with your personal retirement goals.

Take action, not chances

Market volatility is as inevitable as sunrise after night, but it doesn’t have to dictate what your retirement will look like. With budgeting discipline, thoughtful management of your investments, and maybe a lifetime income fund thrown in the mix, you can keep your retirement date on track and embrace your next chapter with confidence.

Next steps:

• Talk to a trusted financial adviser about guaranteed income products and whether they may be right for you. Ask your employer’s plan administrator whether a lifetime income fund is available inside your group retirement plan.
• Commit to reviewing your retirement plan at least once a year. This is a chance to reassess your goals, adjust your portfolio if necessary, and boost your confidence in your savings strategy.