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How To Protect Your Retirement From A Recession | 4 Best Ways to Recession-Proof Your Savings & Investment Portfolio

Are We Headed into (already in) an Inevitable Recession?

With crystal clear indicators flashing our now record-shattering highest inflation rate of 8.6% in 40 years, NASDAQ’s losing 5% of its value on the index’s worst day of the year (May 5), the Dow suffering 4-digit losses, and the FED’s issuing of the biggest interest rate hike in 20 years, it’s no wonder folks are seriously starting to reach for that dreaded PANIC Button.


Key Takeaways:

  • The recent market drop may scare people away from retiring in the next few years.
  • But a financial planner says the market isn’t the only factor to consider when deciding whether to retire.
  • Consider doing a Roth conversion, delaying Social Security, and start living on a budget.
  • Also, with Gold prices on a solid steady upward trend (gold has historically held its value through inflation, recession, wars, and global financial turmoil), exploring retirement protection with Gold IRA’s is a given.


Continuing with our clear indicators of a seemingly inevitable recession,…

In the last six months, the S&P 500 has dropped 11.27% and the Dow Jones has dropped 6.15% at the time of this writing. While some experts say the market will eventually make a comeback, it can still be nerve-wracking to see your hard-earned 401(k) dollars seemingly disappearing minute by minute.

(Business) Insider spoke with financial planner Jay Zigmont, founder of Live Learn Plan and financial planner to hundreds of people in the FIRE (Financial Independence/Retire Early) movement, about whether or not it’s a good idea to retire during a recession.

Zigmont says, “The market is just one part of the decision to retire. Retirement is both about a new stage of life and making sure you have the funds to pay for that new stage. With the recent downturn in the market, it’s time to reassess to see if your plan works.”

It’s “completely possible that you may not be able to afford to retire right now,” he says, but there are ways to use a recession to adjust your plan appropriately and build a new strategy with your financial planner or advisor. 





Here are 4 Steps You Can Take to Proactively Protect Your Retirement Funds From a Recession:


1. Consider Converting Your Traditional 401(k) or IRA to a Roth IRA Account


“Now may be a good time to do Roth conversions,” says Zigmont.

A 401(k) is an employer-sponsored retirement plan where employees can contribute pre-tax income and let it grow. An IRA, which stands for Individual Retirement Arrangement, is similar to a 401(k) but available to anyone making money, regardless of who you work for.

Traditional 401(k)s and IRAs are funded with pre-tax dollars, which means you’ll need to pay taxes when you finally use the funds in retirement. On the other hand, Roth accounts are funded with after-tax dollars, which means you won’t have to pay taxes when you withdraw the funds in retirement.

Zigmont says, “When you do a conversion, you pay the taxes now, but amounts converted to a Roth IRA grow tax-free and they come out tax-free.” 

He adds, “Keep in mind that a 401(k) has required minimum distributions,” — or RMDs for short, withdrawals that you’re required to make from your retirement accounts annually, starting at age 72 — “so if you have a Roth 401(k), be sure to roll that to a Roth IRA after you stop work as a Roth IRA does not have RMDs.”






2. Re-Assess Your Social Security Plan


Zigmont recommends going to to download your most recent Social Security benefits statement. “Your Social Security statement will tell you how much you will get if you start claiming Social Security now and each year going forward. Each year you put off getting Social Security, the amount you get each month (for life) will go up.”

He says that Social Security benefits have a built in cost-of-living adjustment, which is 5.9% in 2022.

Some people might choose to start drawing from their Social Security benefits now, says Zigmont, but he adds this warning: “If you feel like you need to take your Social Security payment now to make up for the down market, remember, you are making a choice that impacts the rest of your life.”


3. Start Living on a Fixed Income Now to Prepare for Retirement


At the end of the day, the best way to recession-proof your retirement plan is to start adjusting to a lower fixed income as soon as possible. Zigmont says, “If you feel like things are going to be ‘tight,’ then it might be that you need to shift your retirement date. Start living on a budget now as if you were on a fixed income and see if you are OK with it.”

If you’re really anxious, he also suggests using financial software that can run Monte Carlo simulations, which churn out how your retirement plan will work depending on where the economy is by the time you retire. “Those simulations will give you a number that reflects the chances that you’ll run out of money,” he says.


4. Diversify and Protect Your Retirement Savings with a Gold IRA


The point of diversifying your assets, according to Adrienne Ross, CFP, founder of Clear Insight Financial Planning, LLC, is both to spread out risk for investments that perform poorly and to capture the upside of investments that do well.

“There is never a bad time to diversify with an eye on retirement income,” said Adam Goetz, a partner at Burstin & Goetz in Pittsburgh and president of MassMutual’s advisors’ association. 

“It is crucial to build retirement assets that are non-market correlated.”

Invest in Real Assets (Real assets include precious metals, commodities, real estate, land, equipment and natural resources.)

People nearing retirement should “work [their] way into real assets over the next couple years as they begin to go on sale,” said Phil Town, founder of Rule #1 Investing.

Dennis Notchick, a certified financial planner for Stratos Wealth Advisors, suggested gold as an ideal real asset to invest in because at present, “gold is doing well and will probably continue to do well.”

As further points out, gold is the “king of safe havens” from recessions and other market turmoil.






*Additional TipSeek Trusted Professional Guidance


Whether you are nearing retirement or still have time to plan, the best moves to recession-proof your retirement can vary from person to person. Getting expert advice can help ensure you’re on the right track.

“If people need guidance, working with an advisor is helpful to map out a financial plan,” Tharp said.

Here are three of the top-rated best Gold IRA investment advisor companies, from both a strategic mid to long term planning perspective, but more importantly from a ‘white glove’ customer service focus.


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GoldcoAugusta Precious MetalsBirch Gold Group

-Excerpts via two sources:
3 Steps to Take Right Now if You’re Thinking of Retiring During a Recession, According to a Financial Planner(s)
23 Biggest Ways to Recession-Proof Your Retirement


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