Can a market crash benefit retirees?

A market crash can benefit retirees under specific conditions related to the timing and recovery of the market. Michael Kitces explains that if retirees experience a market crash early in retirement but the market recovers quickly (within a year or two), the long-term impact on their retirement funds can be minimal. This scenario contrasts with prolonged periods of mediocre returns or slow recovery, which pose a greater risk 1.

Brad Barrett highlights that for savers who are still accumulating assets (not yet retirees), a market crash presents an opportunity to buy investments at a lower price, effectively ‘on sale’. This can significantly benefit their long-term financial growth as they purchase more shares at lower prices 2.

Thus, the benefit of a market crash to retirees depends significantly on their investment strategy, the timing of the crash relative to their retirement, and the speed of market recovery.