Investing in a bear market can be unsettling to say the least, but the reality is that those who commit to staying their course during times of market volatility are those likely to come out ahead (way ahead) in retirement. Saving for retirement is a long-term game, and your investment process should follow that same philosophy. 

Here are four ways to save for retirement, even in a bear market. 

1. Set up automatic contributions

This can be for a 401(k), IRA, or taxable brokerage account, but the important thing here is that you do it. Setting up automatic account contributions takes all emotion out of investing -- a necessary factor to achieve long-term investment success. The absolute worst thing you could be doing is looking at a falling stock market every day and, shortly thereafter, refusing to add any more money until "things get better." When that happens, it's likely the market will have been on its way to recovery for some time. 

Automatic contributions also ensure that you keep investing when markets turn south. Despite a sustained bear market in 2022, those who continued contributions throughout the year saw the S&P 500 rise from around 3,500 to over 4,000 by January 2023. Even though we're still in the same bear market, continuous contributors have already started to come out ahead.

Couple discussing finances in the kitchen.

Image source: Getty Images.

2. Diversify globally

Just because one area of the globe is in a bear market doesn't mean that all areas are. This underscores the importance to invest in a global portfolio of stocks and bonds, and not just a few hand-picked stocks or other securities. Single stocks and bonds carry unsystematic risk, or risk that can't be diversified away; broad stock market mutual funds that cover large swaths of the globe tend to be far less risky on the whole. 

At the same time, different markets around the world tend to recover at different rates -- and we don't know exactly how or when any single market will recover. Rather than trying to pinpoint the bottom as an entry point to one particular market, it's sensible to continuously hold well-established index funds with many different companies in various parts of the world. As a result, in a bear market you're more likely to experience only a moderate decline relative to a catastrophic one, which can be motivating to continue your saving journey. 

Simple index funds like the Vanguard Total Stock Market Index Fund and the Vanguard All-World ex-US Stock Market Index Fund are smart choices for hands-off investors. 

3. Focus on the factors you can control

When the market is falling, it's hard to feel optimistic about investing for retirement. To quell any anxiety, focus on the factors within your control: 

  • Build your income by adding side hustles or finding alternative ways to earn more.
  • Gain a greater understanding of tax-advantaged retirement accounts, like Roth or Traditional IRAs. 
  • Fully understand your company's 401(k) plan documents and how to earn your employer match.
  • Review market data that reveals short-term noise often appears invisible in the context of a decades-long saving effort.

Maintaining optimism is important. But it's even more important that you take action to ensure you're receiving every advantage that you deserve.

Saving for retirement should be stress-free

Assuming you have decades to invest, saving for retirement should be a low-effort and low-stress activity. You can start by setting up automatic contributions to your employer's retirement account, like a 401(k) or Roth IRA, and by making sure you are receiving any 401(k) company match at work. From there, be sure to avoid speculating on single stocks in your retirement accounts and stick with low-cost, globally diversified index funds. Finally, try to grow a mindset of controlling the variables you can control, and let the rest be what it is -- background noise.