How to Get your Retirement Plans Recession Ready?
It feels like a replay of 2008, only this time around there is an added health threat of the novel coronavirus pandemic. Although market experts had been warning the world of an impending financial crisis, it is doubtful whether they precepted it to hit us so fast and so hard. The COVID-19 virus outbreak here played a major role, by hitting the accelerator and driving the economic crisis direct to our doorstep.
However, there are still arguments whether we can yet call it a global recession, as by definition it means the decline in GDP for two quarters consecutively. But there is no denying that the world is going through an economic slump and it’s going to take some time to recover.
The world was anticipating this moment when the stocks started crashing and dived lower each day. Now, that we are already face-to-face with it, the pressure is high on the retirees and the pre-retirees to secure their retirement plans.
Figuring Out Your Retirement Amid Financial Crisis
Recession, depression and high inflation, all three financial situations cannot be prevented. Acceptance of the situation, that you are in a global financial crisis is the first step of planning. Staying in denial, or working up conspiracy theories and waiting idly doing nothing till the storm blows over, none of the above works.
Being proactive and putting the right strategies in place is the key to overcome such a situation. The next step is to work out a plan to manage the risks.
Here are a few steps that you can follow to avert the worst, during a financial crisis:
- A person who has retired or is nearing the same should look for long-term care coverage considering the healthcare costs. It is best to avoid any moves that drive you towards more debt. So, one needs to prioritize the priorities.
- It is a good time to put a check on the spending habits and assess them. This is no good time to rake up a hefty credit card bill on discretionary expenses that are unnecessary.
- Now might be a good time to build up the cash reserves, at least for the coming 18 months, if that is possible.
- You can prevent the risk of expensive health care by opting for Medicare and other supplemental medical insurance.
- Try to work for as long as you can, to get a supplement for your retirement plan.
- Now is the time to take calculated investment risks for the opportunity to grow the retirement income and savings. There is no better way to income than investment.
- It is not a great time to load up your 401(k) accounts as a retirement strategy. Those are the accounts that are most susceptible to market fluctuations.
It might be a hard time financially, but if you plan it well enough then it becomes easy to ride out the rough economic wave of recession.