If you follow the news lately, which I don’t really recommend by the way, you know there are lot’s of bad things happening in the world. Not just in the US but all over the world, Europe included. The worst of it is probably the instability of our financial system and the possibility of a recession which experts are saying is about a 50/50 chance at this point! What to do if you are worried about your finances in retirement? There are some steps to take in order to at least alleviate some of the worry, but human nature being what it is we all will still have concerns. Here are some helpful tips to take in preperation of these scary times (stop watching the news).

Focus on What You Can Control

One of the biggest lessons I’ve learned is that worrying doesn’t change the economy, or anything else for that matter. The stock market will rise and fall, recessions will come and go, and economic downturns are simply part of the cycle. Instead of letting fear take over, I focus on the financial strategies within my control. I make sure my budget is in order, my investments are diversified, and my emergency fund is strong. By knowing exactly where my money is and how it’s working for me, I feel more confident—regardless of what’s happening in the economy. As far as political instability around the world, that also isn’t something we have any control over so why worry?

Diversify for a Stronger Financial Foundation

When I first started planning for retirement, I was heavily invested in stocks. It worked well for a while, but the recent ups and downs of the market made my retirement income feel unpredictable. That’s when I realized the power of diversification. They say that when stocks go down, generally bonds tick upward – which is why most financial advisers tell us to have some bonds in our portfolio.

I made some adjustment inmy portfolio to include a bonds, gold, and cash reserves (think money market fund). Having different sources of income means I’m not completely reliant on the stock market’s performance. Some retirees also invest in rental properties, dividend-paying stocks, or even small side businesses. A well-diversified plan provides stability and makes a scary retirement scenario much less likely.

Build an Emergency Fund for Peace of Mind

Nothing puts my mind at ease like having a solid emergency fund. I keep at least six months’ worth of living expenses in a high-yield savings account. This means that if a recession does hit, I won’t have to sell investments at a loss just to cover my bills. Yes, it does take some discipline to save the money but it will give you some control when things are starting to unravel or bills get behind due to inflation.

I also make sure I have enough liquid cash to cover major unexpected expenses. Knowing I have a financial cushion helps me sleep better at night. If you don’t have an emergency fund yet, it’s never too late to start—even setting aside a small amount each month can make a big difference over time. Make sure you have the money in a high-yield savings account, because most big banks regular savings are quite miniscule!

Cut Expenses Without Sacrificing Enjoyment

When I first retired, I thought cutting costs meant giving up the things I love. But over the years, I’ve found ways to trim my budget while still enjoying life.

Instead of eating out as often, I’ve discovered the joy of cooking at home. I use senior discounts wherever possible, take advantage of free local events, and find ways to travel more affordably. Downsizing to a smaller home or moving to a lower-cost area can also make a big impact. By reducing expenses where I can, I create a more recession-proof retirement without feeling deprived.

Stay Invested and Avoid Panic Selling

One of the biggest mistakes I made in the past was pulling money out of the market during downturns. It felt like the right move at the time, but I learned the hard way that selling investments out of fear often leads to losses. The market has always rebounded, and those who stay the course tend to come out ahead in the long run.

Now, I remind myself that recessions don’t last forever. I’ve adjusted my withdrawal strategy to minimize the impact of market declines, but I don’t panic. By sticking to a solid investment plan, I ensure my money continues working for me even during uncertain times.

Consider Part-Time Work or Side Income

I never thought I’d work in retirement, but I’ve found that having a small side income not only helps my finances but also keeps me active and engaged. Some retirees pick up consulting gigs in their former industries, while others turn hobbies into income—whether it’s writing, tutoring, or selling handmade crafts.

A little extra income can make a big difference in a scary retirement scenario. Even just covering small expenses like groceries or travel can reduce the pressure on investment withdrawals. It’s empowering to know I have options if needed.

Practice a Positive Mindset

I’ve come to realize that worrying about a recession doesn’t just impact my finances—it affects my overall well-being. Stress and anxiety can take a toll, and I refuse to let economic fears control my life. If you are the worrying type, find a way to destress somehow – exercise is good, even meditation can help relieve the stress in most people.

Also, focus on gratitude. I remind myself of the great things I have in life, the wonderful experiences I still get to enjoy, and the fact that I have the tools to navigate any economic challenge. Surrounding myself with positive, like-minded people also helps me stay motivated and resilient. Once again, stress never helped anyone or solved anybodies problems.

Final Thoughts

A recession can be unsettling, but it doesn’t have to ruin retirement. By focusing on smart financial strategies, cutting unnecessary stress, and maintaining a positive outlook, I’ve found that it’s possible to build a recession-proof retirement. If there’s one thing I’ve learned, it’s that preparation is the best antidote to fear. The economy will always have ups and downs, but with the right plan in place, I know I can face whatever comes my way with confidence.

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Sources:

1. Vanguard. “How to Stay the Course During Market Volatility.” www.vanguard.com
2. U.S. Bureau of Economic Analysis. “Understanding Economic Cycles.” www.bea.gov
3. AARP. “Retirement Planning Strategies for Economic Uncertainty.” www.aarp.org

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Happy retirement planning!