8 Lessons Retirees Can Learn From Past Bear Markets

Downturns are never fun, but understanding historical trends can help steady nerves

David Rodeck,

AARP

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En español

Published April 22, 2025

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AARP (Getty Images, 2)

Stock market downturns can feel like a gut punch. Your portfolio reflects years of savings and earnings, and it’s hard to watch it spiral. What's a retiree to do at such stomach-churning times?

Very little, advises Tara Lawson, a wealth strategist at U.S. Bank Private Wealth Management. “It is essential not to panic and remember that market corrections, while unpleasant, are a normal part of investing,” she says.

A bear market is an ongoing decline in stock market prices. A stock index is considered to be in bear territory when the value falls 20 percent from the previous high. For example, the S&P 500 — which tracks the stock prices of 500 of the largest U.S. companies — hit a record price of 6,147 on February 19, 2025, meaning it would enter a bear market if the index falls below 4,917.

That hasn't happened yet, but the Nasdaq Composite, which primarily tracks tech stocks, recently fell into bear territory. The index hit a record high of 20,173 on December 16, 2024; amid months of tariff-induced volatility, it sank to 15,267 on April 8, 2025.

Looking at past stock market trends and results is no guarantee of future performance, but it can help steady nerves during turbulent times. Here are eight important lessons retirees can glean from prior bear markets.

1. Bear markets happen regularly

In a perfect world — for retirees and, really, investors of all ages — the stock market would only go up, but we all know that’s not what happens. In fact, there's a bear market roughly every six years, according to Fidelity. But that’s just an average — no one has a crystal ball that can predict the market’s trajectory. Recent bear markets were spurred by the COVID-19 pandemic, the 2008-2009 financial crisis and the bursting of the dot-com bubble of the late 1990s.

With decades of investing under your belt, you’ve lived through bear markets. As you deal with the current market turmoil, remember how you felt the last time things went south — and how you eventually made it to the other side.

2. Bear markets typically do not last long

No one can predict exactly how long a downturn will last, but past bear markets have usually been short. A bear market ends when an index's price increases 20 percent above the next low. Say the S&P 500 bottoms out at 4,500 points. It would need to rebound to at least 5,400 points to re-enter what’s known as a bull market, the positive mirror image of a bear market when stock prices are generally rising.

Since 1929, bear markets have lasted 289 days on average, according to Hartford Funds, an investment management company. That’s not always the case, though — the bear market that began in 2000 after the dot-com bubble lasted more than two years.

3. Losses feel painful, but they’re usually smaller than bull market gains

A 20 percent market loss undeniably stings, and some bear markets hit especially hard. The average bear market bottomed out with a loss of 35 percent. That said, bear market losses are typically outweighed by gains when the stock market is thriving. The average bull market has posted total gains of 111 percent.

4. Long-term stock investments generally pay off

Since 1957, the S&P 500 has delivered an average return of 10 percent annually. That nearly 70-year stretch included significant bear markets. Certainly, there were painful years, but investing in the stock market still paid off over time.

“Historically speaking, markets do bounce back eventually,” says Lawson. “Retirees who have learned from their past experiences with bear markets and stay the course for the long term will be reward.”

5. Dividend stocks usually deliver steady income, even in a bear market

You’ve probably had income stocks in your portfolio over the years, and you may still have them today. These stocks focus on paying out dividends to investors — the company shares its profits as cash payments to stockholders. Dividend stocks tend to be more blue-chip, well-established companies like Coca-Cola, Microsoft and Procter & Gamble.

Historically, most dividend stocks still pay income during a bear market, which can help balance declines in the share price. These dividends can provide retirees with some much-needed relief during a downturn.

6. Cash during a bear market isn’t immune to inflation

Holding cash in a bear market might feel like a safer approach than holding stocks, as you don’t see losses, but there are drawbacks — most notably, inflation.

In many past bear markets, inflation slowed down, too, as the economy and consumer spending weakened. However, that’s not always the case. During a bear market in the early 1970s, unemployment was high and an oil shortage drove up prices. Investors who weren’t earning a return on their money struggled to keep up.

Today, post-pandemic inflation is high by historical standards and could worsen with President Donald Trump’s sweeping tariffs. A March survey by the Federal Reserve Bank of New York’s Center for Microeconomic Data found that consumers expect the inflation rate, which stood at 2.4 percent in March, to rise to 3.6 percent by March 2026. If it does, someone who holds only cash would see their savings dwindle, relative to their costs.

7. Panicking can lead to poor decisions

Dumping all of your stocks during a bear market might feel like a good way to avoid losses, but it's the definition of "selling low," and past stock market performance shows this typically backfires.

For example, someone who missed the 10 best days of returns in the S&P 500 from 1995 to 2024 would have seen less than half the return of someone who stayed invested that whole time, according to Hartford Funds.

Many of these big one-day gains happen during bear markets. Remember how quickly the stock market skyrocketed to new heights during the COVID-19 pandemic, just a few months after the initial crash? Investors who sold at the bottom of the market missed the fast rebound.

8. Managing your emotions is essential

Bear markets are stressful, especially for retirees or people nearing retirement. But as you go through a downturn, keep the above lessons and all your past investment experiences in mind to maintain a level head.

Try to follow this tried-and-true advice:

Avoid constantly checking stock prices on your phone, cut back on reading daily market news and don’t panic over fear-inducing headlines.
Don't make quick changes based on emotion. Keep faith in your long-term goals and investment strategies.
Maintain your mental and physical health. If the market has you feeling down in the dumps, focus instead on hobbies, exercise and socializing.

If you’re worried about the future, consider consulting a financial adviser, who can provide a neutral sounding board and help you make the right moves to weather a bear market.

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David Rodeck is a writer based in New York City. He has written for Kiplinger’s Personal Finance, Forbes Advisor and Investopedia. Before becoming a full-time writer, Rodeck was a financial advisor.