Retired woman sits in a wooden chair and pets a small dog while planning to secure her retirement during a recession.

How to Recession-Proof Your Retirement


A recession may be on the way we the economy recovers from COVID-19. Here's how to plan for and protect your retirement during a recession with Fifth Third.

Unusual circumstances in the current global economy may mean that a recession is on the way. It's a concern for many—but particularly retirees, who may be worried about their retirement accounts taking a hit.

Although it's never possible to completely prepare for a recession—you can never be quite certain of the next twist or turn—there are strategies that older Americans can use to prepare for a recession, and that will help them know what to do when it arrives.

How to Prepare for a Recession in Retirement

A big component of preparing for a recession in retirement is being proactive. As economic conditions fluctuate, the likelihood of making significant changes to your portfolio to seek out savvy investment options may become more difficult. This is particularly true if you go it alone without outside expertise.

It’s now more important than ever to make sure you’re getting personalized help from a financial professional who can evaluate your specific holdings and how they’re tied to your retirement goals. Your financial professional will be key to guiding you during these times; if you don't have one, now is the time to build a relationship with one if possible.

In either case, there are a few key considerations for making the most of your portfolio as it currently stands. Moving portfolio assets away from equities can help minimize your exposure to market volatility. Minimizing the role that stock ownership and index fund positions play in your retirement-oriented goals may provide a steadier financial picture, which goes a long way as you look to build your post-work budget.

Additionally, knowing your expected retirement budget is key. Your fixed income in retirement is a paramount consideration: you’ll need your savings to account for the majority of your funds. Moving holdings into annuities offers a stronger likelihood that you’ll receive a steady flow of income throughout your golden years. Plus, a firm understanding of your essential expenditures can help you better understand what funds you have left over for travel, hobbies, and other luxuries.

But all of these preparations will depend on your personal asset allocation and portfolio. The most important thing to take away is that now is the time to schedule time with your financial advisor—whether on the phone, on a video call, or in person if possible—and be sure that you're entering a potential economic contraction at the most advantageous position you can.

How to Survive a Recession in Retirement

Changing your portfolio or reacting to markets isn't the only way to survive a recession. An important component is understanding your current lifestyle, future expectations, and the means you have to support both.

Much of this comes down to basic budgeting. Budgets aren’t just for college students; if you don’t have a budget set up now, it’s the right time to get a sense of all of your incomes and expenditures and plan your spending. Then, you’ll want to stay close to your budget, and remember that a budget is a constantly evolving thing as your variable costs change—even your essentials.

If you need help setting a budget or adhering to it, reach out to a financial professional for assistance. In general, keeping lines of communication open is one of your smartest strategies for surviving a recession in retirement. Advisors have the expertise and the market sensibility to guide you in the right direction. Never feel embarrassed to reach out for financial help if you have questions or fear.

Additionally, don’t lose yourself in the news and headlines. Many headlines only report on short-term changes, which don’t give you a picture of your long-term asset picture. It’s often the case that many reports won’t even apply to the way your assets are allocated at all.

We’ve mentioned it before, but we’ll emphasize it again: One of your best resources is your financial professional. His or her expertise can also help you focus your attention on the right headlines as they pertain to the specifics of your portfolio, which helps cut through the noise and enables you to understand exactly what’s happening with your retirement portfolio specifically.

How to Be Strategic About Your Retirement Future

Above all, flexibility is key when planning for your retirement future. You should expect to have to make changes—sometimes quickly—with your plans and desires, especially during a time of recession. But smart planning and avoiding knee-jerk reactions can set you up to be able to survive retirement during tumultuous economic times.

The best way through a recession—or any kind of economic event—is with a strong financial professional who knows both your goals and your money. Retirement in a recession is a great time to find an advisor if you don't already have one.

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