The table nobody shows you
| Loss | Gain needed to get back to even |
|---|---|
| −10% | +11.1% |
| −20% | +25% |
| −30% | +42.9% |
| −40% | +66.7% |
| −50% | +100% |
A 10% dip is a nuisance. A 50% fall means doubling your money just to be where you started, before you've earned anything at all.
How long it has actually taken
- Dot-com crash: the S&P 500 fell about 49% from March 2000 to October 2002. On a closing-price basis it didn't regain its March 2000 high until 2007.
- Financial crisis: the index closed 2008 down 38.5% for the year and fell about 57% peak to trough by March 2009. The October 2007 high wasn't regained until March 2013, about five and a half years.
- 2020: a 34% fall in five weeks, recovered in about five months. Fast, but only because of the scale of the response.
- 2022: a 25% fall from January to October. The prior high was regained in January 2024.
Those are price returns, without dividends, which shorten the recoveries somewhat. They're also measured from peak to peak, which is exactly the experience of someone who retired at the peak.
Why this matters more in retirement
While you're saving, a crash is a sale: your contributions buy more. Once you're drawing income, the climb back is time you spend selling at the bottom. That's the sequence-of-returns problem, and it's why the arithmetic above means something different to a 35-year-old and a 65-year-old with the same portfolio.
What a floor changes
A strategy that credits zero in a down year doesn't need the 43%. The next up year starts from the top. It gives up part of the upside to do that, through a cap or participation rate, and locks the money up for a surrender period. Whether that trade is worth it depends on how much of your savings you could stand to see cut in half, and for how long. That's the conversation, and it's a numbers conversation, not a sales one.