Is Your Retirement Portfolio Built For 2008 Or For 2022?
Part of our series on building a mix that lasts. Start here: is 60/40 dead?
Most retirement portfolios were built with one bad year in mind, and it’s usually 2008. That’s the year the bond half of a 60/40 mix did exactly what it was supposed to do. But the most recent bad year, 2022, worked the other way, and plenty of retirees found out their safety net had a hole in it. So let’s answer the question with the numbers for both years. Then we’ll come back to the one that matters more for the next ten years: not which crisis your portfolio was built for, but whether it can take a crisis you haven’t seen yet.
What Happened In 2008, And What Happened In 2022?
We ran a plain 60/40 mix, 60% in the S&P 500 fund SPY and 40% in the core bond fund AGG, rebalanced every month, through every calendar year since 2004, dividends included:
| Year | Stocks | Bonds | 60/40 |
|---|---|---|---|
| 2008 | −36.8% | +8.3% | −21.0% |
| 2009 | +26.4% | +3.0% | +17.0% |
| 2022 | −18.2% | −13.0% | −15.8% |
| 2023 | +26.2% | +5.7% | +17.7% |
Bonds saved 60/40 in 2008. They sank it in 2022.
In 2008 the economy cracked, interest rates fell and bond prices rose; the bond half took about 16 points off the stock loss. In 2022 inflation was the problem, rates jumped, and bond prices fell along with stocks; the bond half took less than 3 points off. Of the 22 full years from 2004 to 2025, 2022 is the only one in which both SPY and AGG lost money.
So the answer is: a classic 60/40 portfolio is built for 2008. It is insured against a growth scare and not against an inflation scare.
See more lines: 60/40, year by year since 2004
60/40 lost money in only three of 22 full years: 2008 (−21.0%), 2018 (−2.4%) and 2022 (−15.8%). This year through October, 60/40 is up 6.8%, with stocks up 11.7% and bonds down 0.6%. Full table: Trefis price cache, monthly rebalanced, dividends included.
How Low Did Each Piece Go, And How Long Did It Take To Come Back?
Calendar years hide the worst of it. Here is each fund from its high to its low, and when it got back:
| Fund, episode | Fall | Low | Back at high |
|---|---|---|---|
| S&P 500 (SPY), 2007-09 | −55% | Mar 2009 | Aug 2012 |
| Dividend growers (VIG), 2007-09 | −47% | Mar 2009 | Feb 2011 |
| Gold (GLD), 2008 | −29% | Nov 2008 | Sep 2009 |
| S&P 500 (SPY), 2022 | −24% | Oct 2022 | Dec 2023 |
| Core bonds (AGG), 2020-22 | −18% | Oct 2022 | not yet |
| Long Treasuries (TLT), 2020-23 | −48% | Oct 2023 | not yet |
Stocks took more than three years to recover from 2008 and about 14 months from 2022. The bond funds still haven’t recovered from 2022.
That last line is the one most retirees never see. More than four years after its 2022 low, the core bond fund, the “safe” 40%, is still below the high it set in 2020, even counting the interest it paid. Long Treasuries lost almost half their value from the 2020 high. A 2022 doesn’t just hurt for a year. It can leave the bond half of your plan underwater for a long time.
What Does That Mean For Someone Living Off The Portfolio?
A loss feels different when you’re taking money out. Say you had $1 million in 60/40 and took out $40,000 at the end of each year. Our arithmetic, using the yearly returns above:
- Starting in 2008: about $750,000 at the end of 2008, and about $898,000 by the end of 2010, still below where you started.
- Starting in 2022: about $802,000 at the end of 2022, and back to about $1.0 million by the end of 2024, helped by two strong years for stocks.
Both hurt. But 2022 had a second sting the table doesn’t show: prices of everything you buy were rising fast, so the same $40,000 bought less. Consumer prices rose about 6.5% over 2022, per the Bureau of Labor Statistics. A year when your portfolio falls and your costs jump at the same time is the one retirement plans handle worst.
What Held Up In Each Kind Of Year?
Here’s where the pieces of a portfolio earn their place. The same funds, calendar years, dividends included:
| Piece | 2008 | 2020 | 2022 |
|---|---|---|---|
| Long Treasuries (TLT) | +34.5% | +18.2% | −31.2% |
| Gold (GLD) | +4.9% | +24.8% | −0.8% |
| T-bills (BIL) | +1.6% | +0.4% | +1.4% |
| Dividend growers (VIG) | −26.7% | +15.4% | −9.8% |
| Dividend payers (SCHD) | not listed | +15.0% | −3.3% |
Long bonds were the best friend of 2008 and the worst of 2022. Gold and cash were steady in both. Dividend stocks were a 2022 shield, not a 2008 one.
The same pattern shows up stock by stock. Three of the best-known dividend payers, at Friday’s close:
| Stock | Dividend yield | 2008 fall | 2022 year |
|---|---|---|---|
| Coca-Cola | 2.2% | −41% | +10.6% |
| Procter & Gamble | 2.6% | −39% | −5.0% |
| Johnson & Johnson | 1.9% | −34% | +6.0% |
Each beat the S&P 500 fund’s −18.2% in 2022 by a wide margin. In 2008 each still fell more than a third from its high.
So no single piece covers both years. That’s the case for mixing them.
What Would Have Held Up In Both Years?
Here’s the part that will still matter in 2027. We tested several mixes over the last nine and a half years (April 2017 to October 2026, rebalanced monthly). That stretch has one 2022 in it and the sharp 2020 crash. Each mix swaps some of the bonds for things that behave differently when inflation is the problem: dividend-paying stocks (the Trefis Income Solution, a backtested model portfolio, before fees), a little gold and some cash.
| Mix | A year | Worst drop | 2022 |
|---|---|---|---|
| 100% S&P 500 | 14.6% | −23.9% | −18.2% |
| 60/40 | 9.5% | −20.0% | −15.8% |
| 40 Income / 40 S&P / 20 bonds | 11.5% | −17.0% | −8.9% |
| 40 Income / 40 S&P / 10 gold / 10 cash | 12.8% | −15.1% | −6.2% |
| 100% Income Solution | 12.9% | −17.7% month-end | +2.9% |
Every mix with a dividend sleeve, gold or cash lost far less than 60/40 in 2022, and earned more a year.
On $1 million, the difference in 2022 between 60/40 and the 40/40/10/10 mix was about $97,000 that never had to be earned back. The Income Solution itself, 50 dividend stocks weighted by size with no more than 5% in any one, each with ten straight years of dividends, lost about 65 cents for every $1 the S&P 500 lost in down months and made 76 cents for every $1 it made. Its page says it lost about 35% less than the S&P 500 in selloffs, on average, and it yields about 3.0% now, roughly three times the S&P 500. We take these mixes apart in more detail in Is 60/40 dead?
Now what these mixes give up, because they do give something up. The Income Solution earned 12.9% a year against 14.6% for the S&P 500 over the window, and it trailed the index in 6 of 10 calendar years; in 2023 it made 1.4% while the index made 26.2%. The best mix trailed a plain S&P 500 fund by about 1.8 points a year. And the window is short: it covers one 2022 and no 2008, so the 2008 evidence comes from the funds above, not from the mixes themselves.
What About This Week?
Thursday was a small 2008, not a small 2022. It was the AI trade unwinding: the chip makers and the companies building the power and data centers behind AI fell hardest, after weeks of worry about power and the growing opposition to new data centers, a risk we flagged on Nov 2. The S&P 500 fund fell 4.4% to $733.00. The dividend fund SCHD fell 2.2% and DGRO 2.8%, and the 50 stocks of the Income Solution, at their October weights, fell 1.5%. Long Treasuries edged up and gold rose. That’s the good kind of bad day for 60/40. It tells you nothing about which kind of bad year comes next, and neither does anyone’s forecast. If you’re wondering what follows a day like that, we looked at the last 21 in Will stocks rebound, or do you have a plan?
You don’t get to pick the next crisis. You only get to pick a mix that survives more than one kind.
What’s The Bigger Number?
Three losing years in 22 for 60/40, and two of them were big. If you’re 65 today, you may well live through two or three more years like that. Some will look like 2008, when bonds help. Some may look like 2022, when they don’t. A plan that has only been tested against the first kind is half a plan. That’s the less random part of all this: not when the next bad year comes, but how many kinds of bad year your money can take.
What Should You Do This Week?
1. Run your own mix through 2008 and 2022. Use the yearly returns of what you actually hold. Write the worst year down in dollars, not percent, and the dollars you’d take out that year on top.
2. Name your inflation shock absorber. If the only answer is “bonds,” you’re covered for a 2008 and exposed to a 2022. Dividend payers, a slice of gold and a year or two of spending in cash each did their job in 2022.
3. Make any change on a quiet day. Not after a 4% Thursday. What this replaces: dumping bonds because of 2022, or dumping stocks because of this week. Both are decisions made under pressure.
The risk: a mix built for both kinds of years will lag in a straight-up market, by about 1.8 points a year in our window. On $1 million over ten years that’s real money. Weigh it against how a 2022 would feel in the year you need the income.
A classic 60/40 is built for 2008. Bonds rose 8.3% while stocks fell 36.8% that year, but fell 13.0% in 2022, the only year since 2004 both lost money, and the core bond fund still hasn’t regained its 2020 high. Mixes with a dividend sleeve, a little gold and some cash lost 6-9% in 2022 instead of 15.8% (model, before fees), at the cost of lagging strong rallies. Test your portfolio in both years before the next one picks for you.
Follow this story with us: we’ll keep running these mixes as the year closes and report which ones held up.
Has Your Portfolio Been Tested In Both Years?
Most retirement plans have only been checked against one kind of crisis. If you have $1 million or more invested, get a second opinion from a Trefis expert partner advisor: a free 15-minute call to run your mix through 2008 and 2022 and see the worst year in dollars. Or let Invest With Trefis build and run a mix designed for both.
For questions about this article or underlying research, email help@trefis.com.