Performance and Dangers in 2026: Protect Yourself

US Stocks and bonds suffered losses in Q1 2026, but Commodities earned 40% and Gold continued its gains with a 9% return. Because most target date funds (TDFs) are concentrated in US stocks and bonds, they suffered losses of more than 1% in the quarter. This contrasts to results above 2% for (the very few) safer, more diversified glidepaths. Diversification beyond US stocks and bonds added more than 3% in the quarter.

Diversification was not paying off until now because US stocks were the best performing assset class for most of the past 17 years. One quarter is too soon to declare a game changer, but who knows.

Safer, more diversified glidepaths are provided by the trillion-dollar Federal Thrift Savings Plan (TSP), Dimensional Fund Advisors (DFA), Greycourt’s flexPATHs and my Soteria. These glidepaths hold more than just a token amount of alternatives like commodities and real estate, and they are safer at their target date.

Here’s a contrast of the diversification and protection in these two groups of TDFs:

Most TDFs are not diversified and do not protect those near retirement. They’re mistakes waiting to happen. There are reasons that fiduciaries and their beneficiaries should be concerned now. A correction will happen, and many believe that it will be devastating.

Dangers threaten stocks and bonds, and retirement savings

There are plenty of reasons to worry about what happens next. Here are four of them.

• Wars are costing us dollars and precious blood. The cost so far for Ukraine and Iran exceeds $700 billion and growing. Consequently, our national debt continues to swell.

• We each owe $357,068 to pay our $39 trillion national debt. How high is too high? 125% of GDP is its highest level ever, even higher than WWII.

• The Magnificent 7 companies have suffered double digit losses. Artificial intelligence (AI) has buoyed up a very expensive US stock market, until now.

• Retirement savings have reached $50 Trillion, with most of that invested in US stocks and bonds. Each 1% loss in market value is $500 billion. Those near retirement in the Retirement Risk Zone will suffer most, namely most of our 75 million Baby Boomers.

What’s next? Lessons to be learned

“Those who fail to learn from history are condemned to repeat it.” — George Santayana

This quarter could be a tipping point for serious market corrections. Younger people will likely recover from such corrections. Baby Boomers won’t.

There is a correction ahead. We just don’t know when and how bad. But this time we should learn. Most participants in retirement savings plans want to be protected and think they are, but they’re not. There are solutions to this problem. Safer, better TDFs will emerge from the ashes.

People in the Retirement Risk Zone spanning the 5 years before and after retirement should be especially afraid at this critical time in their lives.

SEE ALSO:

• When Glide Paths Fail: Rethinking Downside Protection in Target Date Funds
• Treasury Bond Term Structure is Shifting. Look out Below.