How to Prepare for a Recession During Retirement

Written by Jeremy Biberdorf

Preparing for a recession is something anyone getting ready for retirement should think about. You might have the perfect plan — but if a recession hits, your well-thought-out retirement fund may disappear faster than you had thought. The good news is there are several ways you can prepare for a recession comfortably.

1. Have an Emergency Fund

It is a wise idea to contribute an amount of money from each paycheck to your emergency fund. Even if it is not a lot, every bit counts. You and your financial advisor should decide how many months of living expenses you should save up.

Do not worry if you only have a small fund so far. Even if you only have a couple months of living expenses saved up, you still have a start. Consider keeping this emergency fund in a higher-interest savings account rather than a low-interest checking account so you earn some interest on it.

2. Stay in the Market

When the market takes a dip, your first impulse might be to sell everything and get out. But this may not be the best idea. Since many people are living longer, you will most likely need your money to last a while. Also, if you are not yet retired, you won’t need the money in your retirement portfolio. Retirement accounts can withstand more ups and downs for people who are not currently using the money and won’t need it for several years.

3. Diversify Your Savings

The closer you are to retiring, the more important it is to diversify your investments. You should never keep all your eggs in one basket because this presents a huge risk to your savings. If you have your portfolio spread around multiple sources, it is more likely that at least part of your portfolio will respond positively when the stock market is down.

One rule that many people used to use is the 60/40 rule, where 60 percent of your portfolio is invested in higher risk with a better return and 40 percent is invested in lower risk that does not pay as well. However, this rule may not be enough for people who are retiring soon. Historically, factors such as high equity valuations, low prices in commodities, and increased risks in bond funds have all served to make the 60/40 rule work. But now, you should consider an even broader mix of investments.

4. Manage Your 401(k)

It is best to think of your 401(k) as a long-term investment, which means it will experience fluctuations during market changes. And when the market is changing, you should not make major changes to your 401(k).

Maximizing your 401(k) savings now can help you save as much as possible. This is especially true if your employer offers matching contributions. Never forgo employer matching. This is free money and is one of the best ways to build retirement savings over time.

5. Pay Off Your Debt

It is especially important to pay off any remaining debt while you are still getting an income. When you are paying off your debts, you should never use your 401(k) to pay down debt.

Instead, building regular debt payments into your budget will help you get rid of debt without making your retirement savings suffer. It is a wise idea to plan to pay off a bit more of the debt each month than required. That way, when the debt is gone, you can invest the money you would have put toward your debt in your portfolio instead.

6. Earn Extra Income

More and more people are working part-time in retirement. Just because you are retired does not mean you have to sit around at home by yourself. Once you have more time, you may want to consider doing something fun, like pet-sitting or starting a small side business. You may even consider helping out at a local business. This extra income can help you supplement your retirement funds, especially in a recession.

7. Have Sources of Retirement Income

In an ever-changing market, not all your income sources are sure things. Having some stable sources of income during your retirement, such as annuities, pensions, and social security, will help ensure you are still getting an income, even if other parts of your portfolio fail. Strong dividend paying stocks are also wise to have as they are generally less volatile over time. There are plenty of dividend payers, such as Exxon and Procter & Gamble, that have paid out a solid dividend for decades without ever cutting their dividends.

8. Work with an Expert

Navigating retirement savings can be tricky, especially when the market is uncertain. Luckily, you do not have to do it alone. A financial advisor can understand your financial goals and guide you to options that will help you reach them. They can also help you make wise financial decisions. For example, if the market suddenly goes downhill, a financial advisor can encourage you to avoid making the mistake of panicking and selling immediately.

If you decide not to go with a financial advisor, many other options can guide you through retirement planning during a recession. For example, retirement blogs and forums can be an excellent place to connect with others planning for retirement and to gain invaluable advice. You can also look into retirement planning apps to help you in your journey.

9. Do It Yourself Retirement Planning

There are a lot of great online financial and retirement planning tools available to do-it-yourself types. Serious financial and retirement planning software was once only the realm of financial advisors. But that is no longer true. A financial and retirement planning application called WealthTrace allows consumers to create their own sophisticated financial and retirement plan. Consumers can also run a lot of different what-if scenarios, including what happens to their retirement portfolio during a recession.

Conclusion

Following these tips can give you peace of mind during any recession. Managing your finances wisely and saving up for a rainy day will help you comfortably get through any tough times up ahead.

Finding Ways to Relax Your Way Through Your Retirement

Written by Carol Trehearn

Retirement often comes at the end of a long and stressful working life. You may well have spent forty or more years working hard in stressful conditions, so it is important to reward yourself with some relaxation after all the years of hard work.

This can be harder to achieve than you may think. Your life is likely still full of responsibilities to your family and friends, and you will want to start planning for older age by looking at new stairlifts and ways to stay active to make the most of your retirement years. Finding the time to relax may be easier in retirement, but it can be difficult to find the right place or activity to give you some peace and quiet to enjoy.

Here in this quick guide, we are going to look at three ways any retiree can get a little extra time to themselves or with their partner to relax and enjoy some of the time that retirement gives you.

Follow Your Passions to a New Hobby

You may well have had passions and interests through your working life that you never had the time to properly enjoy while you were committed to your job.

Now you have more free time, you may well find it more relaxing and enjoyable to pursue your hobbies and could even make some new friends and acquaintances along the way. Consider looking for a club or organisation close to you where you will find like-minded retired people who share your hobbies.

Make Sure You Take the Right Breaks

Taking a well-earned break and visiting a relaxing spot is a great way to get a little extra peace and quiet in your retirement.

There are some fantastic and relaxing hotels and resorts across the country that can give you just what you need to recharge your batteries after decades of hard work and stress. A few days away in a hotel that offers spa treatments and fine dining can be an excellent way to enjoy your retirement.

Take the Stress Out of Home Living

A great way to invest some of your retirement earnings is to hire some help at home. Having a regular cleaner or even a cook visit your home to help with some of the daily tasks can take a lot of the stress and responsibilities away from home living.

It doesn’t have to be every day or even every week, but having someone that will come round and do some of the chores for you can take a lot of the stress out of daily life and free up some of your time for you to enjoy some hobbies or take a trip away.

After decades of hard work, everyone deserves to find some time to relax and look back over their distinguished career.

Retirement can give you a lot of free time to enjoy, even with commitments to friends and family. You owe it to yourself to make the most of the opportunity with some relaxation time to yourself or with your partner.

Hopefully, this quick guide has given you some inspiration, and some information, that will help you find some extra relaxation and peace in your retirement.

Frugal Retirement Living Tips for Seniors

Written by Holly Clark

Time has passed, and your working days are behind you. As you come to terms with the new reality, you start grappling with the fact that the savings in your bank may not last you as long as you thought they would. Even if your pension payments amount to as much as a million dollars, your spending habits can drain your account fast. Before that happens and you are left at the mercy of handouts from your family, learn a few frugal retirement living tips for seniors. They will make your sunset years as comfortable as if you are still receiving a salary.

  • Downsize

At 30 years, that five-bedroom house was a good idea as you planned to have lots of children. Now that they are all grown up and have left the nest, it is time to move into a smaller house. That way if you are renting, the rent will be much less. Still, even if you own the home, the cost of maintaining it will reduce. Additionally, you can sell the excess stuff that you have accumulated over the years for extra cash.

Moreover, you might have bought two cars; one for your partner to make reporting to work in different parts of town easier. However, as retirees, you will probably be spending most of the time together, so one vehicle makes sense. You can, therefore, sell the extra car to reduce the cost of insurance payments.

  • Look out for discounts

Just because you have retired, it does not mean you have to live cheaply. Instead, you can get high-quality services and products at pocket-friendly prices. If you are adventurous and have been saving for a trip in your old age, then take advantage of off-peak discounts and travel to that much-anticipated destination. That way, you will get to travel without draining your savings.

Further, you can still celebrate your love with your loved one without breaking the bank. Hotels are always giving offers to customers for tasty meals so you can have that dinner date you have been postponing for weeks. Besides, most stores offer senior discounts, and unless you ask, you will not know. Therefore as you go out shopping for everyday items, ask about any senior discounts available.

  • Eat meals at home often

Dining out may seem like a lovely idea when that lobster looks delicious from the window as you pass by your favorite restaurant. Unfortunately, it will cost you heavily, especially if you make it a habit of eating out. Enjoy home-cooked meals and when you go to the grocery store, shop for products that are on sale. Also, buy items that you need in moderate quantities, and when you cook, serve what you can comfortably eat to avoid waste.

  • Take advantage of free leisure activities

You might wonder how to fill the free time because as much as you enjoy watching television, cable TV can be expensive unless you get the basic package. Besides, staying indoors is not an option since you need to stretch your legs and socialize. As such, you can visit your local art galleries and museums. Not only will you learn and probably make new friends, but best of all is that they are free leisure activities.

  • Reduce health-related expenses

Your health in retirement is going to be quite an issue since your risk of falling ill increases. Whether you are on Medicare or Medicaid, if you are planning on having elective surgery, then it may not cover the cost. Therefore plan on having such operations after meeting your annual deductible. Moreover, with free medical checkups being offered once in a while, take advantage of such screenings for preventative measures.

Jane Byrne from FirstCare Kildare points out that as a patient ages, medical check ups are essentially being done regularly. This is not only to secure that the patient’s health is in tip top shape but also help inform the caregiver on how to properly attend to them.

  • Cut down on taxes

Taxes will reduce the amount of money for your expenditure. Therefore if you can avoid them, your savings will last longer. The property you have accumulated can result in high taxes; so if the state you live in allows for seniors to freeze their property, do so. All you need is to apply for this option, and it will cushion you from any tax increments.

  • Schedule your withdrawals

You might be tempted to withdraw all your pension as a lump sum, but that will only increase the chances of spending it all. Therefore, do not keep lots of cash in hand. Instead, arrange with your bank to be sending you to check once a month to enable you also track your taxes.

Retiring does not have to be a painful process in which you deny yourself all the things you were used to in your working days. With these frugal living tips, you can have the best of everything without spending too much money or becoming a burden to your children.