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However, those investors still had years to continue saving, and they were able to ride the bull market that started in March The situation was more grim for investors in near-dated funds, including those set to retire in Among those funds that were hit hard included the Oppenheimer Transition , which experienced a 41 percent loss in The financial crisis also unearthed another risk: Bonds weren't necessarily a safe place to hide, either. Where some target-date funds held short-term bond funds within their fixed income allocations, others held riskier high-yield bond funds, which can move in the same direction as equities, he said.

The dramatic decline was a teachable moment for fund managers: Afterward, they gave more thought to their bond portfolios and considered whether any one underlying fund could drag down the whole portfolio, Holt said. If anything, they've added more stock exposure for investors who are in the middle of their careers. This way, these savers can continue to capture market gains and stave off the risk they will outlive their savings in retirement, said Holt.

Bear in mind that the managers are the ones who determine how the assets are invested, as well as the fund's changing allocation — known as the glide path — as your retirement date approaches. That means you might see some target-date funds with greater exposure to stocks at the retirement date, while others might be more conservative.

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Difficult lessons were also in store for employees who were invested in target-date funds and the employers that sponsored their retirement plans. Imperfections aside, target-date funds at least kept employees from making bad investment decisions. In late , following a round of layoffs by an employer in Austin, an outplacement firm brought Pottichen in to talk to employees who had just lost their jobs and educate them on what to do next with their k accounts.

When the Crash Comes // Recession-Proofing Our Retirement Plans

One laid-off worker had retirement plans at five employers. At four of those companies, he allocated himself heavily toward stocks. The plans where this saver invested most aggressively experienced the steepest losses during the recession, Pottichen recalled.

Following the crash, retirement plan advisors pushed to help employers and workers understand market risk. For Pottichen, that means selecting target-date funds based on the demographics of a given employer. For instance, an employer with an older population that has high savings rates and large balances might be better off with a target-date fund that is less aggressive, he said.

Employees are also coming to terms with the fact that while they can't control market performance, they can control other aspects that will improve their retirement savings. Automatic enrollment places workers into the retirement plan by default, while auto escalation boosts their contributions into the k. Sign up for free newsletters and get more CNBC delivered to your inbox.

10 Years Later: How the Financial Crisis Affected Seniors

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Your Retirement Looks Good 6 Years After the Economic Meltdown |

Key Points. Target-date funds whose investors were on the verge of retirement experienced losses exceeding 20 percent during the crisis. Market corrections happen, but investors must maintain a long-term focus and save consistently. The current mandatory employer contribution is 9.

According to a paper from the Centre for Pensions and Superannuation at the University of NSW, the maths isn't pretty: Workers aged between 30 and 40 would have needed to save as much as two per cent above the mandatory 9. Baby boomers would have had to either increase their contribution rate or delay retirement to make up for their losses. Protecting your super Cooper's message to Australians in the retirement risk zone is to consider moving more assets into fixed-interest investments that return, say, six per cent a year instead of the eight or nine per cent the share markets can offer when times are good.

The 2020 Recession: How To Prepare For The Next Market Crash

Playing it safe means re-allocating toward fixed-interest products such as bonds or term deposits. But switching may not be easy when you're more or less bound to what the fund manager is doing. Talk to a trusted financial adviser. It's always a good time to protect your superannuation assets, not just when the share markets appear to be on the brink of meltdown.

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Super fund members of any age can benefit from parking their money in safer havens during risky times, but such a move requires a hands-on approach. At a minimum, review the level of risk in your account and discuss safer options with your fund manager, whether or not you decide it's time to reduce risk. Latest Money. Best health insurance extras.

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