Is the 2025 economy stable again? The markets seem to have normalized since the crazy drop in April, tariff threats are easing, inflation has slowed, and job numbers are holding steady. Even so, financial confidence feels wobbly. Headlines shift daily and many Americans feel the threat of uncertainty. Wouldn’t it be nice to have a crystal ball to tell you where the market is headed next? Well, the Volatility Index or VIX can provide some short term clues. Find out what it has to say about the future and how to use it in your own retirement planning.
What is the Volatility Index (VIX)?
The Volatility Index, formally known as the Chicago Board of Exchange Volatility Index and VIX or CBOE VIX for short, is a gauge that measures how nervous the markets are. More specifically, it tracks how much investors expect S&P stock prices to fluctuate over the coming month. It’s sometimes called the “fear index” because it reflects investor uncertainty and perceived risk in the short term.
But it’s important to understand what the VIX doesn’t do. It doesn’t predict future market direction or say whether stocks will go up or down.
It simply reflects how much movement investors expect.
How Does the VIX Work?
The VIX is calculated based on S&P 500 options trading. These are financial instruments investors use to hedge or speculate on future market moves. When there’s more demand for options (especially protective ones), it’s a sign investors are bracing for turbulence.
Tracking the VIX
You can track the VIX here.
What is a Normal, High, and Low Vix?
Over the last 15-20 years, the VIX has averaged at around 18-19. The most extreme readings occurred during events categorized as financial crises. In March of 2020 (the COVID crash), the VIX was over 80. In the 2008 financial crisis, the VIX soared to over 90. More recently, April of 2025 showed some degree of volatility around the on again off again tariffs. During that month, the VIX was mostly in the 30s, climbing to a high of 52.33 on April 8.
- A lower VIX (typically under 15) suggests investors see a calmer, more stable outlook.
- A higher VIX (typically above 20) means markets expect greater volatility—more price swings, more uncertainty.
- A high VIX (typically 30 and over) can indicate that the market is highly volatile and there may be some extreme swings soon.
What Does the VIX Say About 2025?
As of May 2025, the VIX is hovering around 21–23. That’s above average, but no where near panic territory.
What it means:
- Investors are feeling cautiously uncertain.
- There’s an expectation of some choppiness, but not a full-blown crisis.
This elevated-but-not-extreme reading makes sense given today’s mixed economic signals.
Use the VIX to Understand Sentiment, Not as a Call to Action
The VIX can be a good indicator for how nervous investors are. However, most people should think of the VIX as interesting information, not a call to action.
While there is an adage that says, “when the VIX is high, it’s time to buy,” it’s probably not a measure to be used by amatuer investors to determine buy and sell strategies. Buying when the VIX is high is a contrarian strategy that suggests buying stocks when the CBOE Volatility Index (VIX) is elevated.
Instead, your overall asset allocation and buy and sell decisions should probably be determined by a long-term strategy focused on achieving your goals, not on any one short-term index. Your investment strategy should be driven by your personal goals, time horizon, and risk tolerance—not a short-term measure of market nerves.
Learn more about building an investment policy statement, a document defining your investment goals, strategies for achieving those objectives, a framework for making changes to your plan and what to do if things don’t go as expected.
How to Prepare Your Retirement Plans for Market Ups and Downs
The best thing to do if the stock market falls (or rises) is to stick to a plan. Don’t have a plan? Get started, here are 10 surprising moves to make when stocks go down.
You don’t need to predict the future. You just need a plan for whatever the future holds. Use the Boldin Planner to:
- Stress test your retirement plan with optimistic, average, and pessimistic return assumptions.
- Model different market conditions using the Boldin Planner.
- Use Monte Carlo simulations to understand the likelihood of success under volatile scenarios.
- Build flexibility (different sources of retirement income and a budget that increases spending in good times and scales back to just the necessities when markets are underperforming) into your financial projections.
And most importantly—stick to your strategy. The best offense against market uncertainty is a solid, forward-thinking defense.