What 100 Years of Market History Tells Us About Your Retirement Plan

​Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.

I got a call last week from a client.

She's 53, a PERS 2 member with 28 years in, sitting on about $650,000 between her DCP and personal savings. Planning to retire at 58 in just under five years.

"Seth, I'm nervous," she said. "The market keeps going up. It feels like we're due for a crash. Should I move everything to bonds?"

I get this question alot right now.

When stocks have been strong for a while, it's natural to assume something has to give. That the rally can't continue. That one bad downturn could wipe out decades of careful saving.

Recently, Morningstar published their quarterly Market Observer report with a fascinating chart mapping nearly 100 years of US stock market history.¹ When you zoom out and look at that full century of data, several widely accepted beliefs about market crashes start to look far less certain.

This matters enormously for Washington State public employees planning retirement.

Because the decisions you make today about your DCP, your pension option, and your investment strategy will determine whether you can actually retire in your late 50s and maintain your lifestyle for 30+ years.

The Chart

​The Morningstar chart tracks US stock market performance from 1926 through 2025, color-coding three distinct phases: expansions (when markets climb to new highs), downturns (drops of 20% or more), and recoveries (the climb back to previous peaks).¹

What jumps out immediately is how much time the market spends recovering and expanding versus declining.

Over the past century, the market spent about 142 months in bear market (down) territory. It spent another 349 months working its way back to prior highs.¹ Add those together and roughly 40% of market history has been falling from or climbing back to previous peaks.

And yet, despite all those setbacks, the market has compounded wealth for long-term investors over and over again.

Three Myths That Could Derail Your Retirement Plan

Let me walk through the three common beliefs the Morningstar data actually challenges.

Myth 1: This Rally Has Been Too Strong

Since the market bottomed in September 2022, we've seen solid returns. Strong enough that many people assume this can't continue.

But here's what the data shows.

Since 1926, there have been 11 total market expansions. The average expansion lasted just under six years. The market more than tripled in value on average during these expansions, delivering roughly 21% annual returns.¹

The current expansion? As of late 2025, it was only in its 25th month. Less than half the historical average. And the annual return during this stretch has been right around 21%, essentially in line with what we've seen in past expansions.¹

This rally is not the unprecedented outlier many think it is.

It's actually tracking right along with historical norms.

Now, does that guarantee a catastrophic drawdown isn't around the corner? Of course not. But the strength of this rally alone is not a reason to panic or make drastic changes to your retirement investment strategy.

Myth 2: This Bull Market Is Getting Old

It's been over three years since the market bottomed in September 2022. People hear that and think we must be due for a downturn.

​But historically, the average recovery period (the time it takes for the market to climb back to a prior high after a downturn) has lasted almost exactly three years.¹

When you combine the average recovery time with the average expansion, you're looking at roughly nine years on average from a market low to the next high.¹

By that historical measure, this bull (up) market is far from long in the tooth.

I'm not saying stocks will simply keep going up. What I am saying is that making investment decisions based on a gut feeling that "it's been going up too long" isn't a sound strategy.

History shows bull markets can and often do last much longer than people expect.

Myth 3: One Bad Bear Market Will Ruin Everything

This is the fear that keeps many up at night.

The idea that one nasty crash could wipe out years of progress and destroy your retirement plan.

Bear markets are real and they're painful. The 2008 financial crisis is proof of that.

​But here's what that century of data shows: despite spending roughly 40% of market history either falling from or climbing back to previous peaks, the market has consistently compounded wealth for disciplined, long-term investors.¹

As Morningstar wisely put it, “the US stock market's long-term success has never been a story of uninterrupted progress. It's been a story of resilience amid setbacks.”¹

Why This Matters for Washington State Public Employees

If you're planning to retire at 58 with a PERS, TRS, SRS, or LEOFF pension, you're looking at potentially 35+ years in retirement.

That's a long, time horizon.

Your DCP account and personal savings need to bridge the gap until your pension starts, cover the years between retirement and Social Security, and provide supplemental income throughout retirement.

The question isn't whether the market will experience another downturn. We all know it will.

The question is whether your plan is built to withstand it.

The Real Risk (And It's Not a Crash)

I need to acknowledge something important here, especially for those of you within five years of retirement.

While the long-term data is reassuring, the timing of a downturn relative to when you start taking withdrawals from your portfolio matters enormously.

This is called sequence of returns risk.

Two retirees can own the same portfolio with the same long-term average return, yet the one who suffers a major downturn early in retirement can end up in a dramatically worse position. Why? Because they're forced to sell more investments at lower prices to fund withdrawals.

This is precisely why I advocate for having the right asset allocation in the three to five years before retirement.

It's why I recommend maintaining what I call a "war chest" of five years' worth of withdrawals in high-quality short-duration bonds.

It's why your pension is so valuable as a foundation. It allows you to take strategic equity exposure with your DCP and personal savings without being forced to sell stocks at the worst possible moment.

You need a plan that ensures you don't have to liquidate investments during a downturn to pay for basic living expenses, cover a tax bill, or fund that Alaska cruise you've been planning for years.

What Actually Ruins Retirements

If 100 years of market data tells us a crash alone won't ruin your retirement, what will?

In short, it's not a bear market. It's what you do when one shows up.

It's halting your DCP contributions because headlines are scary.

It's moving everything to cash and waiting for things to settle down.

It's trying to time your way back in and missing the recovery.

It's buying expensive products that promise downside protection while quietly eating away at your long-term returns.

And maybe the most overlooked: it's being so afraid of the next downturn that you never actually enjoy the money you worked so hard to save.

I've seen this countless times. The greatest risk in retirement isn't overspending. It's underspending.

The fear that this rally is too strong or that a crash is right around the corner causes retirees to sit on their savings and never give themselves permission to spend.

They skip the trip. They put off the kitchen renovation. They say no to experiences with grandkids.

Not because the math says they can't afford it, but because they're terrified the next downturn could take it all away.

The market's long-term track record is not one of fragility. It's one of resilience.

If your plan is properly built with the right guardrails in place, you should feel confident spending the money you've worked decades to save.

What This Means for Your Plan

A properly structured retirement plan for early retirement means:

Having a diversified portfolio across multiple asset classes that complement each other.

Maintaining that war chest high-quality short-term bonds to cover expenses for the next 3-5 years so you're not forced to sell stocks in a down market.

Having an investment policy statement that documents your strategy and your response plan for when markets get ugly, so you don't get caught up in emotions and make irrational changes.

Coordinating your pension, Social Security, DCP withdrawals, and personal savings to minimize taxes and maximize spending flexibility.

As Morningstar highlights, there's nothing wrong with preparing for periodic adversity. In fact, you need to prepare for it. But the argument that stocks are just one nasty downturn away from complete failure doesn't hold up based on market history.¹

The Bottom Line

Morningstar's historical research won't accurately tell any of us what the market will do over the next year, five years, or even ten years. Nobody can.

What historical data like this does is provide context.

And that context helps us make more informed, less emotional decisions about our retirement plans.

The biggest risk for most retirement savers isn't the next bear market. It's abandoning a perfectly good plan simply because short-term noise got too loud.

Because you didn't work 30 years to spend retirement worrying about market crashes that historical data suggests your plan can handle.

​Sources

1. Morningstar. "The Beautiful Chart That Busts 3 Stock Market Myths." February 9, 2026. https://www.morningstar.com/stocks/beautiful-chart-that-busts-3-stock-market-myths