Millionaire Librarian

I invested roughly 50% of my income for about 15 years, and during that time, I actually welcomed recessions. Working a stable government job provided a sense of security; when the stock market fell, I saw it as an opportunity to buy stocks “on sale.” I vividly remember the sharp COVID-19 downturn, during which I increased my 401(k) contributions and worked toward maxing out all my tax-advantaged accounts. 

Being retired has felt different. There was a brief downturn around April 2025 triggered by new tariffs. I remember feeling more worried than usual and discussing those concerns with my wife and neighbor. Despite the anxiety, I stayed invested, and the market eventually rebounded. To prepare for such moments, I had already set aside a couple of years’ worth of expenses in bonds to help smooth out the ride during a downturn. 

When you retire—whether early or at a traditional age—you have to contend with “sequence of returns risk.” This is the danger of the market facing a sustained decline early in your retirement. If a retirement plan fails, this risk is almost always the culprit. In April 2025, that was exactly what I feared.

I use Projection Lab, which can run hundreds of scenarios using Monte Carlo simulations. It provides a percentage indicating how many of those scenarios your portfolio “survives.” We had a 97% success rate, which accounted for extreme scenarios like depressions and stagflation. In hindsight, I shouldn’t have been worrying at all. 

I believe your first major recession as an investor tests your psychology and knowledge. It is not unusual to lose more money in a short period than you managed to save the entire year. However, your first recession while retired is an even greater test because you no longer have the safety net of a steady income. You are forced to rely entirely on probabilities, numbers, and established guidelines.

Roughly a week ago, the U.S. and Israel launched military strikes on Iran. Now, everyone is concerned about oil prices and global trade. I have spoken with people who believe “this time is different”—a famous, yet often shortsighted, phrase in the investment world. While this situation feels more serious than the tariff issues that worried me previously, I feel far better prepared for this potential downturn because I have been down this path financially before.

I don’t think there is a way to simulate how you will react in circumstances like these. You can practice a thought exercise, but its not the same. Mike Tyson has a famous quote, “Everyone has a plan until you get punched in the face.” I think the stock market is similar, only there’s no punching back at the collective conscious of the world.