Do bonds go down when stocks go down?
Every time the market drops, the same worry surfaces: if stocks fall, does the rest of your portfolio fall with them? For retirees living off their savings, the answer decides whether a bad quarter is an inconvenience or a real problem.
The short answer
Not usually. During S&P 500 corrections from 2010 through 2025, the index averaged a 17.53% loss while investment-grade U.S. bonds lost just 0.78%, according to Capital Group and Morningstar data as of December 31, 2025. The exception was 2022, when stocks and bonds fell together.
Key takeaways
Stocks and bonds usually do not fall by the same amount at the same time.
In 2025, the S&P 500 fell 19% at its worst point and still finished the year up 18%.
In the five declines before 2022, bonds rose four times and never fell more than 1%.
In 2022, that pattern broke. Bonds did not act as a shock absorber.
The S&P 500 has typically dropped at least 10% about once every 18 months since 1954.
What matters in retirement is not the drop. It is whether the drop forces you to sell stocks.
What happened to bonds during past stock market corrections?
A correction means a drop of 10% or more from a recent high. Capital Group tracked the S&P 500 and the Bloomberg U.S. Aggregate Bond Index across each correction between 2010 and 2025.
Asset class | Average return during those corrections |
S&P 500 Index | -17.53% |
Bloomberg U.S. Aggregate Bond Index | -0.78% |
Source: Capital Group and Morningstar, as of December 31, 2025. Figures are average cumulative total returns during S&P 500 price declines of 10% or more.
Stocks fell by roughly 22 times as much as bonds. That gap is the whole point of owning bonds. They are not there to grow your money the way stocks do. They are there to hold their value when stocks do not.
What stock and bond drawdowns look like year by year
Averages hide the story. The clearer view is what each asset class did inside every calendar year.
The red dots are the worst drop inside each year. The bars are where the year finished. Almost every year has a red dot, and most years still finished green.
Now compare the two sets of red dots. Stock drawdowns routinely run from -7% to -19%, and reached -48% in 2008. Bond drawdowns mostly sit between -1% and -5%.
2025 is the cleanest recent example. The S&P 500 dropped 19% at its worst point and still finished the year up 18%. Bonds never fell more than 3% and finished up 7%. An investor who sold stocks in April locked in the loss. An investor who spent from bonds instead did not.
Source: Clearnomics, Standard & Poor's, and Bloomberg. Data through August 13, 2026.
Why 2022 was different
Honesty matters more than a tidy story here. In 2022, stocks and high-quality bonds fell together. Capital Group notes that many bonds did not play their typical safe-haven role that year.
The reason was interest rates. When rates rise quickly, existing bonds lose value, because newer bonds pay more. Rates rose fast in 2022, so both sides of a balanced portfolio dropped at once.
That was unusual, not typical. You can see it in the bond chart above. In 2022 the bond drawdown reached -17%, roughly two and a half times the next-worst year in the series. In the five market declines before 2022, bonds rose four times and never declined more than 1%.
Still, 2022 is the honest caveat: bonds are a shock absorber, not a guarantee.
What this means if you are retired
If you are still working, a market drop is mostly a headline. If you are drawing income from your portfolio, it is a cash-flow question.
A decline only does lasting damage when it forces you to sell stocks at a low price to pay your bills. Selling into a downturn locks in the loss and removes those shares from the recovery.
This is what the bond side of your portfolio is actually for. Its job is to supply the dollars you need next year, so the stock side can be left alone to recover.
A hypothetical example, for illustration only: A couple, both 67, hold $2.5 million and withdraw $100,000 a year. If $400,000 of that sits in high-quality bonds and cash, they could cover roughly four years of withdrawals without touching stocks. This is a simplified illustration and does not reflect any actual client, taxes, or market outcome.
The right number of years is not universal. It depends on your spending, your other income sources, your tax picture, and how much volatility you can live with.
How often should you expect a drop?
Market declines are routine, not rare. Capital Group analyzed S&P 500 data from 1954 to 2025. Over that stretch, the index has typically dipped at least 10% about once every 18 months. Declines of 20% or more have come about every six years.
Capital Group also notes that every S&P 500 decline of 15% or more from 1929 through 2025 has been followed by a recovery. Past results do not predict future results, but the frequency is a planning fact you can build around.
If you want the fuller history, we cover it in Understanding Stock Market Corrections and Crashes.
Frequently asked questions
Do bonds always go up when stocks go down? No. Bonds have often held steady or risen during stock declines, but not always. In 2022, rapidly rising interest rates pushed stocks and bonds down at the same time.
Are bonds safe during a market crash? Investment-grade bonds have historically fallen far less than stocks during corrections, but they still carry risk. Interest-rate changes and credit quality both affect their value.
How much of my portfolio should be in bonds in retirement? There is no single right answer. One common approach is to hold several years of planned withdrawals in bonds and cash. That way a downturn does not force you to sell stocks.
What is the difference between a correction and a bear market? A correction is a decline of 10% or more from a recent high. A bear market is a decline of 20% or more.
Do these numbers apply to my own bond funds? Not necessarily. The figures above track the Bloomberg U.S. Aggregate Index, which holds investment-grade bonds. High-yield bonds, long-term bonds, and individual holdings can behave very differently. You cannot invest directly in an index.
The bottom line
Bonds usually do not fall as far as stocks. That gap is what lets a retiree ride out a decline without selling shares at the wrong time. But 2022 showed the pattern can break. That is why your specific mix matters more than the rule.
The useful question is not whether another correction is coming. It is how many years of withdrawals you could fund without touching equities if one arrived next quarter. That number is worth knowing before you need it, and it is worth talking through against your own spending, tax situation, and timeline.
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About the author:
CEO and Senior Financial Advisor
Mark is the CEO of Covenant Wealth Advisors and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.
Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER™ professional with the assistance of AI. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.
