The question when it comes to recessions is not if, but when. The markets are always in flux. If the past is the best predictor of the future, we know another recession is on the way. There have been over 30 recorded recessions since the mid-19th century. 2019 marks ten years of recovery since the last global recession. That can’t go on forever.

It’s important that every person takes measures to insulate their retirement funds from recession. There are obvious reasons for this. People who are retired need to draw on their retirement funds. If they’re losing money rapidly, it becomes very concerning. People who are close to retirement age also need to think carefully about building a recession-proof retirement strategy.

One of the keys to building a recession-resistant retirement fund is to diversify. Don’t just rely on a 401(k). Don’t put everything in the stock market. Do a little bit of everything. One crucial step is to build a cushion, so to speak. It’s important to save, so that when a rainy day comes, there’s an umbrella close at hand. Most estimates for a healthy emergency fund suggest having 3 to 6 months worth of savings. While this sounds like a lot, it’s actually not very much in an actual emergency.

Sometimes, there’s an idea that money sitting in a savings account is doing enough. This simply isn’t true of an emergency fund. It’s continuing to accrue compound interest, and that’s good enough. The fund is for emergencies, and needs to be as liquid and available as possible.

Eliminating debt is the next step to take after stashing away funds for an emergency. Retiring with debt causes serious anxiety. Eliminating debt means retirees have more money to spend on the things they like and want to spend on. When taking on debt, eliminate the worst debt first. The worst debt is the one with the highest interest rate. Pay all the credit cards, mortgages and student loans down in order from highest to lowest interest rate.

A final step is to balance the risk in a retirement portfolio. Some high-risk, high-yield investments are fine. But some should also be secure. US government bonds, for example, tend to be very stable over time. When it comes to creating a solid retirement plan, working with a financial planner is your best bet. With their help, they can help you navigate the best decisions for your financial situation and retirement goals.   

Christopher Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.