September Could Be Rough on Your Retirement Portfolio

September 6, 2022

If you’re watching the stock market and eyeing your own portfolio in dismay, stop. Back away from whatever trading platform you use, and take a deep breath.

Yes, it’s been a bumpy year, the kind that defines investing generally and motivates people to avoid investing altogether. Yes, there was a rally in August after the highs of June. Now it’s September, a traditionally harsh month for investors. The S&P 500 index fell 4.7% a year ago in September. The previous year, the S&P was down by 3.9%. Since 1950, the S&P 500 has shown an average decline of 0.5% in September, according to the Stock Trader’s Almanac — the worst month of the year. And this year has been an especially wild ride.

So what should you do?

Nothing. If you’re decades away from retirement, you’ve got decades for your portfolio to recover, and it will. Over and over, the data bears this out. The stock market returns.

What if you’re getting close to retirement? The advice is the same. Don’t touch.

If you are already in retirement, if you absolutely must, withdraw as little as possible. Try to avoid selling at a loss. There’s no reason to withdraw everything you have.

In just a few months, we can look forward (fingers crossed) to the so-called Santa Claus rally, the tendency for stocks to rally over the final trading days of December and into the new year. The Stock Trader’s Almanac notes it has produced positive returns in 34 of the past 45 years, at an average return of 1.4%.

For more on what we might see from September’s stock market, check out Mallika Mitra’s explanation of the September effect and what moves you should make.

— Jill Cornfield, deputy editor

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September Could Be Rough on Your Retirement Portfolio

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