Are you over 55, sitting on a sizable nest egg, and considering an early retirement? You may see the stock market is booming and think your investments will continue delivering great returns, but if the market crashes, as some experts predict, it could wreck your plans.
A 2025 Vanguard report analyzing 2024 plan-year data found that 55- to 59-year-olds allocated 67% of their retirement plan contributions to equities. 60- to 64-year-olds had a 60% equity allocation, and 65- to 69-year-olds had a 52% equity allocation. The study helped to show just how significantly vested retirees are in the stock market, which has done well in recent years.
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The S&P 500 is up almost 13% year-to-date in 2026. Much of this gain is fueled by the buzz in AI, with a recent Reuters report saying most U.S. third-quarter earnings gains are expected to be driven by AI-related companies.
On the flip side, prominent financial analysts and institutions have issued direct warnings that an overheating AI market could burst and trigger a major stock market crash.
Speaking with Bloomberg, Panmure Liberum Strategist Joachim Klement said, “my core conviction is that the AI bubble will either burst in 2027 or in 2028.” He said this because he believes hyperscalers have severely depleted their free cash flow, while the cost of debt keeps rising.
While predictions are not reality, it is important that you ditch the rat race before it is too late, whether you want to retire early or at your retirement age. Here’s what you can do to protect your wealth.
Beware that markets can drop in the early years of retirement
The timing of when the market drops can significantly affect your average gains. And If stocks crash right after you retire, you could run out of money much faster — even if the market recovers later. This pitfall is called the “sequence of returns risk.”
For example, a new retiree may need to dip into their portfolio to pay monthly bills. But once those funds are liquidated during a market crash, it becomes hard to recover even when stocks rise again because there is less money there to grow.
