Guest Column: How to recession-proof your retirement plan

Planning and preparation can help weather the storm of a recession

Andrew Rosen, president of Diversified LLC.

With the Fed raising rates and potential talk of a recession, it’s natural to be concerned about your retirement plans. While you can’t control what happens within the economy, you can plan for recessions and prepare.

Create an Investment Strategy

Part of your recession-proofing plan is ensuring that you’ve got a solid investment strategy. Whether you’re investing on your own or with the help of a financial advisor or money manager, an investment strategy can give you guidance whenever there is market volatility so that you have a strategic plan to refer to in uncertain times. Your investment strategy should be based on an investment philosophy that aligns with your personal beliefs and ideally is backed by academic research, so that you can let these core principles guide your investment decisions.

You should write your investment strategy down so that you can refer to it, and so that it is repeatable in the future. One benefit of an investment strategy is that it helps you to keep your own biases and emotions in check. When markets are turbulent, it’s natural to let your own emotions get involved, but when you rely on your investment strategy you can override your emotional reactions so that you’re making investment decisions from a rational state of mind.

Remain Patient

If you’re still in the phase where you’re contributing to your retirement accounts, and there’s talk of recession, you may be tempted to stop contributing, but now’s not the time to stray from your plan. Buying while the market is low may benefit you further down the line in your retirement – it’s best to consult with a financial advisor as to the best course of action in your specific situation. Try to remain patient, wherever you are in the retirement process. Investing is a long-term process, and markets historically experience volatility, but we also see them recover.

Optimize Your Situation

Take a look at your current financial picture and optimize what you can. Is your cash earning you money – for example, is it sitting in a high-yield savings account? When volatility is low you may like to put extra money toward paying down debt or taking extra vacations – during volatile times or times of recession, skip the extra payments and put those funds into emergency savings accounts until those accounts are fully funded instead. Take a hard look at any large upcoming expenses to be sure that you take care of them before you retire and are relying on retirement income and determine what you might be able to skip entirely. And as always, working with a financial planner may help provide financial confidence as they can run financial plans and projections in various scenarios for you.

- Sponsor -


Andrew Rosen is the president of Diversified LLC, a comprehensive financial planning and investment firm that is ranked #9 in the top 50 fastest growing RIAs by FA Magazine. As a financial planner, he forges lifelong relationships with clients, coaching them through all stages of life and guiding them to better achieve their life goals. Rosen helps others by spreading his knowledge on finance, investments and the pursuit of happiness, and does so through his nationally recognized blog, his contributions to Forbes and Kiplinger, and his appearances in other publications and television programs. Diversified LLC is a Registered Investment Advisor (RIA) with more than $1 billion in total assets and a diverse and multi-generational client base and has recently acquired Marca Financial Planning Service located in Birmingham.

The latest Alabama business news delivered to your inbox