What retirees need to do in a bear market

It’s easy to ride the highs and lows of the stock market when you’re still working. After all, the advice for what to do with your 401k in a down market is pretty standard: wait it out. The average bear market — usually defined as a dip of 20 percent or more — lasts for 13 months and bounces back in about 22. If you’re in your 40s or 50s, the best move is to take a deep breath, maybe brew some herbal tea and be patient.

But if you’re on the verge of retirement or already retired, you’ll need a different approach — or stronger tea. You’re at the point where you need to start putting that money to work and simply waiting a few years while the markets go through their natural cycle might not be possible. As such, using a more nuanced response to a bear market is necessary, one that neither results in panicked selling that costs you money nor leaves you unable to enjoy your retirement the way you want to. So here’s a closer look at how you should approach a bear market as a retiree.

Learn: 20 Things You Should Do in a Falling Stock Market

RELATED: Take a look at these financial tasks you shouldn't hold off until retirement:

If You Are Close to Retirement

If you’re still working but haven’t retired yet, the main method for preparing for a bear market retirement is adjusting your asset allocation before stocks start to fall — namely, moving money out of stocks and into bonds and cash the closer you get to the end of your career. If you have kept moving assets into bonds over time, you should be in reasonably good shape even when the stock market doesn’t play along with your personal timetable. In fact, dropping values on the stock markets will almost always mean the face value of your bonds will be rising, so you could be in a relatively strong position depending on how aggressively you’ve been shifting things around.

However, if you haven’t prepared for the downswing, there are still workarounds. Firstly, as unpleasant as it sounds, you might consider delaying your retirement by a few years. Not only can you avoid selling stocks when the prices are down, but you’ll boost your monthly Social Security payments by as much as a third if you put off your last day.

If you’re not ready to do that, one calculated risk you could take is to focus on selling off portions of your bond portfolio. Since bonds are usually up when stocks are down, you should be getting a good price, and you can probably make up ground after markets recover by shifting money back into bonds when they’re down and stocks are back up. Just know that — in the worst-case scenario — this could backfire in a big way. Your asset mix is already stock heavy and you would only be making that worse in the short term, so an especially bad or long bear market could leave you in an even worse situation a few years later. When in doubt, talk to a financial advisor.

Read: Should You Invest During a Recession or Hold Off?

If You Have Recently Retired

Once again, if you stayed ahead of things with your asset allocation, this bear market retirement shouldn’t lead you to make any dramatic changes to your retirement plans. The one consideration: ensure any part of your portfolio you are selling off in the near term be from your bond portfolio until the market recovers — at which point you can tweak things again to rebalance to your desired asset allocation.

But, if you have failed to keep enough of your portfolio in bonds and cash, the important thing to remember is that overreacting could just make things worse. You’ve got a long way to go in retirement, so finding other adjustments to your finances that don’t involve selling off stocks is ideal. That might mean having to cut back on your spending, downsizing your home and leaning more heavily on your Social Security checks for a few years. Or you could consider looking for some short-term ways to pick up extra income — possibly consulting gigs in the industry you just left. Either way, making some smaller sacrifices now can probably help you avoid much bigger ones later on. Just remember to learn from this and be sure to shift money from stocks to bonds and cash after the smoke has cleared.

Find Out: Best Investment for People Ages 50+

If You Have Been Retired for a While

Keeping the right mix of stocks to bonds in your portfolio will help you avoid having to worry too much about riding out a bear market, even deep in your retirement. Sound familiar?

Repetitive as that advice might be at this point, there’s a reason why it’s so standard. Bonds that you hold to maturity and cash are pretty much the go-to, tried-and-true method to buffer yourself against market volatility — one that matters the longer you’re retired.

That said, if you tried to boost your retirement account by shifting to a stock-heavy mix and then got caught with your pants down so to speak — because this is exactly why most financial advisors would suggest not to do that — it’s still not the end of the world. You’ll just need to make some tough choices about how to proceed, and the same suggestions apply: consider taking on a part-time job or downsizing your living situation. Other than that, you might just have to bite the bullet and take a hit on your portfolio.

More from GO Banking Rates:
The Most Valuable Investments for Retirement, According to Retirees
35 Retirement Planning Mistakes That Waste Your Money
How Long $1 Million Lasts in Retirement in Every State

We make money easy. Get weekly email updates, including expert advice to help you Live Richer™.

This article originally appeared on GOBankingRates.com: What Retirees Need to Do in a Bear Market