It can be worrisome when your retirement date coincides with an economic downturn — especially if your portfolio has dropped in value. You may be facing retirement with fewer funds and an uncertain future.
Still, retirement may be the best path forward if you’re ready to stop working or need to reduce your activity due to a health condition. Assessing your finances and creating a retirement plan can help you get through a bear market and support a sustainable lifestyle. You might even find ways to increase your income by making a few adjustments.
Take these steps to protect your retirement ahead of a recession:
— Look at financial projections.
— Evaluate your portfolio.
— Consider your work options.
— Understand health expenses.
— Review your Social Security benefits.
— Lower living expenses.
— Rely on your support network.
Look at Financial Projections
Lean on budgeting tools to track your finances and build a retirement budget. “There is software available that can tell you how much your assets need to average to provide you with your desired income, and they factor in things like inflation, Social Security and sequence of returns,” said Ron Tallou, founder of Tallou Financial Services in Troy, Michigan, in an email. “If it is in your best interest to work an extra year or two and wait for the economy to get better, you’ll want to know that important information.” Many of these retirement planning tools are free and can help you explore different scenarios.
[Read: Is It Possible to Live on Social Security Alone in 2025?]
Evaluate Your Portfolio
If you’ve been saving for retirement for several decades and have investments spread over multiple accounts, look at how your funds are allocated. “Most retirees are no longer in the wealth accumulation phase of their life and have moved into the distribution and wealth preservation phase, and their portfolio needs to reflect that by minimizing risk,” Tallou said. Meet with a financial advisor to discuss strategies for navigating the coming years and what you can expect from your investments.
Consider Your Work Options
For individuals who are healthy enough to continue working, staying employed for another year or two may be wise. “Every year you work can help you build up more retirement savings and potentially increase your eventual Social Security benefits,” said Cathy Schaeffer, a financial planner with Baker Boyer in Walla Walla, Washington, in an email. “Older employees have the extra advantage to make catch-up contributions to their 401(k) or IRA after age 50.” In 2025, you can put in an additional $7,500 in a 401(k) after meeting the $23,500 limit if you are at least 50 years old. For an IRA, the maximum contribution is $7,000 if you are 50 or older.
[Read: 10 Part-Time Retirement Jobs That Pay Well]
Understand Health Expenses
If you’re age 65 or older, you are eligible for Medicare coverage. However, retirement often brings out-of-pocket health-related costs. You’ll want to consider how much you will spend on health care before signing up for Medicare or a private health plan if you are not yet 65. Compare coverage options to determine what is best for you and your household.
Review Your Social Security Benefits
If you have worked and paid taxes into the Social Security program, you’ll be eligible for retirement benefits. You can get a personalized estimate of your retirement benefits by creating a my Social Security account. You’re eligible to start receiving benefits at 62, but doing so before your full retirement age — typically 66 or 67 — will result in a reduced monthly benefit. Delaying benefits past full retirement age increases your monthly payment up to age 70.
While you may want to start receiving Social Security checks as soon as possible, keep in mind that your Social Security benefit could be impacted if you take a part-time job. If you are not yet full retirement age, your benefit will be temporarily reduced if you earn more than a certain threshold. After you reach full retirement age, your income won’t impact your benefit.
[Read: Here’s How Much Money You Could Lose if Social Security Goes Bankrupt]
Lower Living Expenses
If you are close to paying off your mortgage, aim to eliminate housing debt before you retire. You could also test drive your retirement budget to experience a new lifestyle and monitor your costs. “Some people consider preparing to move to a lower cost-of-living area in retirement, fine-tuning travel goals or taking on new hobbies,” Schaeffer said. Aim to shave expenses as you plan, and you might be able to downsize your budget while living comfortably.
Rely on Your Support Network
Reach out to friends and co-workers retiring around the same time as you. They may be able to offer insight into how they’re coping and share financial strategies. If you live far from friends and family, consider relocating to share living expenses.
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How to Retire During a Recession originally appeared on usnews.com
Update 04/10/25: This story was published at an earlier date and has been updated with new information.
