A trader on the floor of the New York Stock Exchange on Friday. (Michael Nagle/Bloomberg News)

The Nasdaq Composite index has fallen into what investors call a bear market and the broader S&P 500 could follow today. If you’re just tuning in or watching your retirement savings shrink, here’s what you need to know about the decline.

Stocks enter a bear market when widely followed indexes such as the Nasdaq, S&P 500 or Dow Jones Industrial Average sink 20% from their high points. There is nothing official about the determination. The designation is a shorthand way for Wall Street to mark when markets have taken a tumble. It also gives investors a moment to reflect on how the current action in markets compares with previous downdrafts.