Market swings can feel unnerving, especially when your retirement savings are involved. When headlines are filled with talk of downturns and uncertainty, it is easy to feel stuck between wanting to protect what you have and knowing you still need to grow it. The good news is that a volatile market does not have to derail your long-term plan. With the right approach, you can use these moments to your advantage and come out stronger on the other side.
Adjusting Contributions When Markets Dip
One of the most powerful things you can do during a volatile market is keep contributing to your 401(k) or even increase your contributions. When markets drop, your dollars buy more shares at lower prices. This strategy, known as dollar-cost averaging, means you automatically buy low without having to time the market.
For 2026, the IRS raised the employee contribution limit to $24,500, up from $23,500 in 2025. If you are 50 or older, you can contribute an additional $8,000 as a catch-up contribution, for a total of $32,500. Employees ages 60 to 63 may qualify for an even higher catch-up of $11,250. If you can increase your contribution even slightly during a downturn, the long-term impact can be significant.
If maxing out your contributions is not realistic right now, aim to contribute at least enough to capture your employer match. Many financial professionals suggest targeting 10% to 15% of your income per year, including any employer contributions, as a general savings benchmark.
Reviewing Allocations During Uncertainty
Market downturns are a good time to take a step back and review how your 401(k) money is allocated. Your mix of stocks and bonds, often called your asset allocation, should reflect both your goals and your timeline. Someone who is decades from retirement can typically afford more exposure to stocks because they have time to recover from losses.
Diversification is your best defense against volatility. A portfolio spread across different asset types, such as domestic stocks, international equities, and bonds, tends to absorb market shocks better than one concentrated in a single sector. Retirement plans are designed with long-term growth in mind, so short-term drops are a normal part of the process, not a sign that something has gone wrong.
Understanding Risk and Staying the Course
It is human nature to want to pull your money out when the market drops sharply. Selling during a downturn locks in losses and means you could miss the recovery. Historical data from the S&P 500 shows an average annual return of about 10% over the long term. That figure includes the crashes, the recessions, and every period of uncertainty in between.
A JPMorgan study cited by investment researchers found that the average investor earned only about 2.9% per year over a long period. The main reason? Buying and selling at the wrong times. Staying invested through volatility is one of the most effective things you can do to protect your retirement.
Understanding your own risk tolerance matters, too. If market drops are causing you serious stress, that is a signal worth paying attention to. Adjusting your allocation to a slightly more conservative mix is different from abandoning your plan entirely. The goal is to find a balance that lets you stay invested without losing sleep.
Using Employer Resources to Your Benefit
Employer matching is another resource that employees sometimes overlook. The average employer match in 2025 was about 4.7% of pay. If you are not contributing enough to receive the full match, you are leaving a meaningful benefit on the table. That match is part of your total compensation, and it can make a real difference in your final retirement balance.
Building Confidence for the Long Term
Volatile markets feel uncomfortable, but they are a normal part of investing. Employees who stay focused on their long-term goals, keep contributing, review their allocations thoughtfully, and take advantage of employer resources tend to be the ones who build strong retirement savings over time.
The decisions you make during uncertain periods often have a bigger impact than those you make when things are calm. Choosing to stay the course, contribute consistently, and seek out good information puts you in a position of strength, not stress.
If you have questions about your 401(k) or want guidance on how to navigate a volatile market, Able & Strong Advisors is here to help. Reach out today to start a conversation about your retirement strategy. We are glad you are thinking ahead.