Quick answer: When world or U.S. events create uncertainty, markets can swing in the short term — but history shows those dips are often temporary. For most retirement savers, the best response is to stay focused on your long term plan: keep contributing, stay diversified and avoid making big changes based on headlines.
What do global and domestic uncertainty mean for your retirement savings?
For more long‑term planning tips, explore our article on preparing for financial risks.
Current events at home and abroad – such as political conflicts, policy changes and general instability – may make you wonder what they mean for your retirement savings. If enough investors react, it can sometimes lead to temporary market drops and changes in your account balance. The good news: the markets have historically recovered over time, and your long term investing approach can be built to weather uncertainty.
How markets typically respond to uncertainty
Big news can move markets but the patterns are often familiar. Here are common ways markets respond when negative events occur:
- Volatility can increase. Markets may react more to fear and unknowns than to the event itself, which can lead to bigger day-to-day price swings.
- Quick drops and potential rebounds. Stock prices may fall in the short term. Historically, markets have often recovered in the weeks and months that follow.
- A “flight to safety.” Some investors shift to investments they perceive as safer, like certain government bonds, which can affect prices in the short-run.
- Different sectors, different results. Some parts of the market may rise while others fall more sharply, depending on the situation.
What history suggests after major geopolitical events
While every situation is different, historical market data can help provide perspective. For example, research on the S&P 500® Index after geopolitical events since 1980 shows that average performance has tended to improve over time.
Average S&P 500® Index performance after geopolitical events since 1980:
Source: Goldman Sachs, Nationwide Investment Research
| Time after event | Average S&P 500® performance |
|---|---|
| 1 month | 1.0% |
| 3 months | 3.2% |
| 6 months | 5.1% |
| 12 months | 11.3% |
What should retirement savers do?
Here are practical steps to help keep your plan on track:
- Limit the noise. Constant news updates can fuel anxiety. Check your retirement plan periodically, but try not to make decisions based on headlines alone.
- Stick with your long term strategy. Selling during a dip can lock in losses and may cause you to miss a rebound. Case in point: Morningstar’s research found that the average investor underperformed the market by about 1.2% per year due to factors like market timing, which can add up to roughly 15% of total returns over time.1
- Keep contributing if you can. Consistent contributions can help you average out the purchase price of your investments over time. Contributing during a downturn may also mean buying shares at lower prices, so you have more if there’s an upswing.
- Review your investment mix (and rebalance when appropriate). A mix of investments like stocks and bonds can help manage risk. If your mix drifts away from your target, rebalancing (shifting funds back to your intended mix) may help keep your plan aligned with your time horizon and comfort with risk.
- Build a buffer as you near retirement. Consider keeping enough money in liquid savings to cover short term expenses so you’re less likely to need to sell investments during a downturn.
Source:
[1] “Mind the Gap 2025,” Morningstar US_Mind_the_Gap_2025.pdf (PDF) (Aug. 13, 2025).
S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.
Diversification, asset allocation and asset rebalancing do not assure a profit or protect against loss in a down market.
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