Monday, August 5, was not a good day for the stock market. All major indices plummeted and investors were undoubtedly shaken.

I’ve taken steps to make sure this week’s stock market crash doesn’t affect my retirement savings. And I hope you’ve done the same — or will try to do the same the next time something like this happens.

Image source: Getty Images.

My approach to a rapid market decline

Many of my investments lost money this week. Want to know what I did with my retirement account in light of that? Nothing.

After a major market event like this week’s, it’s easy to panic and sell your investments. But it’s important to remember that you won’t lose money in the stock market if you don’t sell your investments when their value has dropped. Doing nothing and waiting for a recovery can help you avoid losing money.

That’s the path I’ve chosen. You see, my retirement portfolio wasn’t put together on a “free-for-all” basis. Rather, I’ve thought about every single asset I own. I’ve also been careful to diversify my portfolio so that I’m not too focused on any one market segment.

Although many of my investments have lost value this week, I still believe they are good investments for me and therefore there is no reason to sell any of them.

I’m nowhere near ready to tap into my retirement account. Even if I wanted to, I’d risk a 10% early withdrawal penalty, so that was another reason I decided not to do anything this week.

Try not to give in to fear

It’s definitely not easy to see the value of your retirement savings suddenly drop. But just because your 401(k) or IRA account balance is lower than it was a month ago doesn’t mean your retirement savings are doomed.

Of course, if you’re approaching retirement age, Monday’s sell-off should serve as a warning to allocate your assets appropriately based on the stage of your life you’re in. For example, you shouldn’t hold 95% of your portfolio in stocks if you think you’re unlikely to retire until 2025.

You may also want to use this week’s events as a reminder to review your portfolio and make sure it’s properly balanced. Granted, the right time to rebalance isn’t when the market is down. But it’s important to be aware of how you’ve invested and whether you’ve put too much money into a particular company or industry, no matter how strong it seems to be.

As a general rule, after a stock market decline of any kind, it’s best to take a deep breath and leave your portfolio alone. This week’s sell-off was not the first of its kind and probably won’t be the last. How you react as an investor can make a huge difference.

The $22,924 Social security bonus that most pensioners completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: One simple trick could earn you up to $.22,924 more… every year! Once you know how to maximize your Social Security benefits, we believe you can retire with the security we all seek. Just click here to learn more about these strategies.

Watch the “Secrets of Social Security” ›

The Motley Fool has a disclosure policy.