My Biggest Retirement Mistake: Retiring Right Before a Downturn

Nine months after I left work, the stock market sank — and took my portfolio down with it

Diane di Costanzo,

AARP

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Published June 24, 2025

a woman relaxes in a chair on a porch. she has a laptop in her lap and is holding eyeglasses

Diane di Costanzo on her porch in Bridgeport, Connecticut. In April 2024 she quit her corporate job, feeling secure in her retirement plan. But an early 2025 stock market drop, paired with continued inflation and less available freelance work, delivered a triple whammy.

Alex Fradkin

Perhaps you’ve heard this financial rule of thumb: You can’t time the markets.

I learned a related lesson the hard way: You can’t know what the markets will do after you retire. In my case, they tanked.

That’s the short story. Here’s the slightly longer version.

In April 2024, I quit my corporate job. My husband and I felt good about our investments and our plan, approved by our financial adviser, to make them last for some 30 years. We were feeling so good that in the fall we embarked on a three-month trip to East Africa and Asia. Like many new retirees, we wanted to kick off this new chapter with an ambitious, audacious adventure.

But in February, we watched from Laos as our portfolio plummeted, dropping by 10 percent at one point. The market has since rallied, but the shock and uncertainty linger. So does inflation, which has been stuck at around 2.5 to 3 percent since I retired and may flare up again as trade policy fluctuates. Suddenly our (admittedly loosely constructed) household budget was way off. And the part of our financial plan that had me bringing in freelance revenue writing and editing ran smack into mass layoffs across the media industry, meaning a lot more people were vying for the same kind of work.

What’s Your Biggest Retirement Mistake?

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If it takes three unfavorable factors to create a perfect storm, we were in one, and we were in a leaky boat, financially speaking: losing money in the market, facing higher living costs and scrambling to find employment.

I had plenty of company. The Alliance for Lifetime Income, a consortium of financial companies that promotes annuities, estimates that 4.1 million Americans turned 65 in 2024, a record number. One indication that more of them were grappling for ways to stay afloat: According to the Urban Institute, 276,000 more people filed for Social Security retirement benefits from October 2024 through April 2025 than during the same period a year earlier, a 13 percent jump.

What can retirees do when the dawn of their “golden years” is marked by economic dark days? For me, a change in perspective was the first order of business. I thought retirement would look one way, and nine months in, it looked very different. Here’s how I’m adjusting to this new reality.

I’m not panicking

Speaking of “you can’t time the markets,” panic-selling is never a good idea, however understandable the impulse. Remember, downswings often don’t last long. When markets recover, panic sellers may be left with both unrealized gains and very real regret.

For new retirees, selling into a downturn also means taking on what’s called sequence-of-returns risk. In a bear market, you’re withdrawing from ever-dwindling assets, which can have negative impacts both today and in the future.

Why? Because every dollar invested has the potential to make money for us. That’s why we invest. Fewer dollars invested means fewer future moneymakers hustling on our behalf — in perpetuity.

The best hedge against sequence-of-returns risk is a retirement plan that includes investments unaffected by stock market drops. With money socked away in a high-yield savings account, for example, retirees aren’t forced to sell stocks at an inopportune time.

“Either you’re well-positioned to weather surprises or you’re not,” says Will Bramblett, a certified financial planner at Northwestern Mutual in Dallas. A solid plan anticipates downturns, he adds: “It’s built not just for the good times but for all times.”

a woman stands on the beach with her eyes closed and face turned up

Di Costanzo at Seabright Beach, near her home. She's thinking about claiming Social Security ahead of schedule and has adjusted her mindset about income and budgeting.

Alex Fredkin

I’m thinking about claiming Social Security ahead of schedule

My husband and I are divided on this issue. He wants to start benefits as soon as he reaches full retirement age (FRA), which for him is 66 and 10 months. That means forgoing the boost Social Security gives you for waiting past FRA: an 8 percent increase in your monthly benefit for each year until age 70. That’s a guaranteed rate of return you can’t reliably replicate in the markets.

But for him, and for many Americans, there’s skepticism around just how “guaranteed” Social Security payments will be in the future. Unless Congress acts to shore up Social Security’s finances, the program’s trust funds will run short of money in 2035, causing a projected 17 percent cut in benefits.

For a third of U.S. adults polled for Northwestern Mutual’s 2025 Planning & Progress Study, the question “Will Social Security be there when I qualify for it?” is among their top three retirement concerns. The survey found that only about 1 in 4 Gen Xers plan to wait long enough to claim their maximum monthly payment.

Stephanie McCullough, founder of Sofia Financial in Berwyn, Pennsylvania, says claiming strategies come into play when couples decide to start Social Security at different ages.

In general, “we suggest that the lower earner claims first, and the higher earner waits until age 70,” McCullough says. That way, a couple can bring in some Social Security income while the spouse in line for the larger monthly payment banks the 8 percent annual boost. This will also increase the lower earner’s potential survivor benefit if the higher earner dies first.

I’m getting real about our household budget

The truth is, I can’t blame our busted budget entirely on inflation. Yes, in the 12 months after I retired, the Consumer Price Index rose by 2.3 percent, according to the federal Bureau of Labor Statistics. But I was surprised — and a little embarrassed — to discover all the pain-free ways I could be saving serious money.

One example: Three years ago, we cut back to just one car. A good move, but we were still paying $1,500 a year to insure the remaining vehicle, a 2015 Jeep Wrangler. We switched insurers and now pay $1,100 for an identical policy. (A LendingTree survey found that 92 percent of car owners who switched insurers saved money.)

I also saved by switching cellphone carriers. We travel a lot, so the $10 per day my prior carrier charged for international service added up. We found a plan that includes 5GB per month of high-speed data for use in more than 200 countries and destinations, at no extra charge. Like many carriers, this one also offers a 55-plus discount, bringing our monthly cost for two phones to $100 monthly (not including taxes and fees) — about $50 less than a similar plan from my husband’s former carrier. As with auto insurance, it pays to shop around.

Closer to home, I’d long thought grocery store apps were digital clutter I didn’t need in my life. Turns out I was missing out on an automatic 10 percent discount at my local Food Bazaar for shoppers age 65 and older who download the store app. I’ve saved as much as 15 percent more from coupons by scanning the app at checkout.

I’m rethinking work

According to the Transamerica Center for Retirement Studies, 53 percent of today’s workforce plans to continue working in retirement, essentially redefining what it means to retire. Workers age 65 and older represent the fastest-growing segment of the labor force, says Catherine Collinson, CEO and president of the center and its parent organization, the Transamerica Institute.

Collinson collects anecdotes about retirees who “got creative” when looking for work in their prior fields. One aerospace executive, knowing that the industry was hiring younger employees, offered his (paid) services as a trainer and mentor. Another retiree recalled a past employer struggling with staffing during the holidays and summertime, when everyone wants to go on vacation. Because the retiree and his wife prefer to travel off-season, he made himself available to work when others were not — a win-win.

In my case, a friend helped me change my perspective on working in retirement. She told me to stop looking back at my peak earning years as a gauge of salary and status — to get over myself, basically — and consider any job that brings in grocery money. She works at a Trader Joe’s and loves it.

Collinson tells a similar tale of a woman who left a high-level corporate position for her dream retirement job: working at a Lululemon store. “She loves the product and the lifestyle,” Collinson says.

And while she herself is not retiring anytime soon, Collinson has already picked out her post-career gig: leading historical walking tours in the Los Angeles area, where she lives. “I love history, I love walking, I love talking to people,” she says. So if you find yourself in L.A. someday and want a local to show you around, ask for Catherine.

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Diane di Costanzo has written about personal finance, real estate, travel, tennis and health for The Wall Street Journal, Vogue, Health, Connecticut Cottages & Gardens and the United States Tennis Association. She teaches a graduate-level media course at New York University and was formerly a chief content officer at Dotdash Meredith.