23, 2026 7:30 pm EST
Sarinyapinngam/Getty Images
The start of 2026 has been a rocky ride for the US economy. The stock market is going through wild swings, GDP growth is slower than expected, and there are worries about what’s to come. While there’s still time for things to turn around in 2026, some experts think a financial crash could be on the horizon, and they’re concerned your retirement savings could be at risk.
This is especially true if you have money in individual brokerage accounts, which are often set up for margin trading. Margin trading lets you borrow money from your broker to buy more investments. This is different from 401(k) and IRA accounts, which don’t usually have this feature. Margin trading has become more popular with everyday investors since the COVID-19 pandemic.
Having your money in margin-enabled accounts means your brokerage firm can use those funds as collateral to back its own loans and financial obligations – a process called rehypothecation. While that may not sound too bad, it could leave you high and dry if the market crashes and/or your brokerage firm goes under.
The downsides of margin accounts
There are a few downsides to margin accounts, and the idea of losing your retirement savings is really unsettling. To protect yourself, you’ll want to be careful if you’re doing any margin trading. Margin trading tends to be too risky for folks nearing retirement age. It’s also worth noting that while the SIPC does insure margin accounts if a brokerage goes under, the process can take months, leaving your money tied up. And there are limits to how much the SIPC will cover, so you could still lose money over those limits.
Another thing to know about margin accounts is that your brokerage firm can sell your securities without telling you if the value drops. So it’s a good idea to review your accounts before any potential crash and make sure you understand the terms. Switching to a cash account might offer better protection for your retirement savings if the economy takes a turn for the worse.
