Whether or not you’re contributing to a 401(k), chances are you’ve heard the buzz—news outlets, family, friends, and coworkers are all talking about the state of today’s financial market. Since reaching a high point in mid-February 2025, the U.S. stock market has taken a noticeable dip. As of mid-April 2025, the S&P 500 has dropped by over 17%, putting it close to what’s known as a “bear market”—which is when the market falls by 20% or more from its peak. While that can feel alarming, these types of market downturns are actually normal. Historically, bear markets happen every four to six years and tend to last around 10 months, while smaller drops, known as “corrections,” happen about every two years.

What makes this market drop different from recent ones— like those in 2008 and early 2020 (COVID-19) —is that this time, the decline is being driven by new and unpredictable trade policies which have spooked investors and triggered a sharp sell-off in stocks.

So, what does this mean for your 401(k)?

If you’re saving for retirement through a 401(k) plan, it’s understandable to feel uneasy. It might feel safer to pull your money out of the market and move it to cash—but try not to let fear guide your decision. History shows that people who sell when the market is down often miss out on the recovery that follows. And those gains can make a big difference over the long run. Forbes highlights that since 1990, the S&P 500 has dropped an average of 8.8% during the last four recessions. However, in more than half of the 13 years that had recessions since World War II, the S&P 500 still showed positive returns.

Your 401(k) is designed to handle ups and downs in the market. The best strategy is often to stay invested, keep your portfolio diversified, and continue making regular contributions. These habits are what help retirement savings grow steadily over time—even when the market gets bumpy.

Strategies for financial resilience

During uncertain economic times, taking proactive steps with your finances is key. Here are four ways to help safeguard your money and build a stronger financial foundation.

1. Keep debt under control

Managing debt wisely is key during uncertain times. You might choose to pay off smaller balances first to gain momentum and a sense of progress. Alternatively, focus on high-interest debt to reduce long-term costs. Pick the strategy that fits your mindset and financial goals.

2. Boost your emergency savings

They say cash is king—and during a recession, that couldn’t be more true. Instead of the usual three to six months of emergency savings, try to bump that up to six to nine months. A little extra cushion can go a long way in keeping you calm and covered.

3. Consider delaying retirement

If retirement is on your horizon, you might benefit from waiting a year or two. Even a short delay can reduce pressure on your retirement savings and help you ride out market fluctuations. While it may seem like everyone’s retiring, staying in the workforce a bit longer could be a smart move.

4. Get personalized guidance

Before you make any big financial moves, get expert advice. Always talk to a tax professional or CPA before making any drastic changes to your 401(k) or other investments. Their personalized insights can help you make informed, strategic choices.