Many workers feel confident about their retirement savings, but market downturns early in retirement can create unique challenges for long-term financial security. Financial professionals often refer to this as “sequence of return risk,” which occurs when retirees begin withdrawing money from their portfolios during periods of poor market performance. Losses early in retirement can have a greater impact because investments have less time and fewer assets available to recover.

Although market conditions are impossible to predict or control, there are several strategies that may help retirees better manage uncertainty and protect their savings over time. Continuing to work part-time or delaying full retirement for a few additional years can reduce the need for immediate withdrawals while also allowing retirement accounts more time to grow. Even modest income during the early retirement years can help relieve pressure on investment portfolios.

Maintaining a balanced portfolio is another important consideration. A mix of stocks, bonds, and cash reserves can provide greater flexibility during periods of market volatility. Having stable assets available for short-term spending needs may help retirees avoid selling long-term investments during market downturns.

Diversification also plays an important role in retirement planning. Different asset classes can perform differently depending on market conditions, interest rates, and economic trends. A diversified portfolio may provide opportunities to rebalance investments and draw from stronger-performing areas when markets become volatile.

Spending flexibility can also improve long-term retirement outcomes. During periods of economic uncertainty or market declines, reducing discretionary expenses may help preserve retirement assets and improve the sustainability of long-term withdrawals.

Retirement planning is about more than simply building savings. It also involves creating flexibility, managing risk, and preparing for changing financial conditions throughout retirement.

This article was adapted from content originally published on Morningstar.com.