What If the Market Crashes After You Retire? (Why Real Estate Could Be Your Safety Net)

You did all the right things. You saved, invested, and planned for retirement.

Then the stock market tanks… right after you stop working.

It’s called “sequence of returns risk,” and it can wreck even the best-laid retirement plan. But here’s the good news:

Real estate could give you the cushion you need.

Let’s explore how to protect your income — and peace of mind — no matter what the market does.

What Is Sequence of Returns Risk?

It’s the risk that the market drops early in your retirement — when you’re starting to withdraw money.

• Losses early on hurt more than losses later

• Selling investments at a loss to pay bills locks in that loss

• Even if the market recovers, your portfolio might not

Real Talk: A 20% drop in year one of retirement can impact your income for decades.

Why Real Estate Can Act as a Buffer

Unlike stocks, real estate tends to be more stable — and it can generate income even when the market is down.

• Rental income keeps flowing regardless of stock prices

• Property values may hold or even rise during inflationary periods

• You’re not forced to sell assets to generate cash

Pro Tip: Real estate income can reduce the pressure on your investment portfolio during downturns.

1. Use Rental Property to Diversify Your Income

Adding a rental property — or converting part of your home — creates another income stream.

• Helps cover monthly expenses without touching your 401(k)

• Can grow over time with inflation-adjusted rents

• Provides a physical asset you control

Example: A South Carolina retiree rented out their garage apartment and earned $1,000/month — enough to cover groceries and utilities during a market slump.

2. Consider a Reverse Mortgage for Stable, Tax-Free Income

If you’re 62 or older and own your home, a reverse mortgage lets you turn equity into income.

• Monthly income or line of credit — no repayment until you move or pass away

• Payments are not tied to the market

• Income is tax-free and can be used however you need

FAQ: "Can I use a reverse mortgage as a backup plan?" Yes — some retirees open one and let it sit as a standby line of credit.

3. Don’t Rely on Just One Source of Income

Diversification isn’t just for stocks.

• Combine retirement savings with real estate income, Social Security, and other sources

• Real estate can help you withdraw less during bad years — and preserve your nest egg

Strategy Tip: Think of real estate as a "shock absorber" in your income plan.

Key Takeaway

If the market crashes after you retire, real estate could be your safety net.

From steady rental income to equity you can tap tax-free, it gives you options — when you need them most.

Curious how real estate fits into your retirement plan?

👉 Book a free 15-minute call → https://interconnectmortgage.com/calendar

Disclaimer: This content is for educational purposes only and not a commitment to lend. We are not financial or tax advisors. Please consult a licensed professional to explore your retirement income options. Interconnect Mortgage — NMLS 1720882. Check licensing at NMLS Consumer Access.