Four Ways to Recession-Proof Your Retirement

May 11, 2020 | Chris Hughes

Monitoring our 401(k) and other retirement accounts can be a stressful endeavor when the markets are unstable. While the 2008 recession did a number on people’s savings, it’s unclear what the long-term effects of economic impacts from the coronavirus threat will be.

The Dow Jones Industrial Average went from around 29,000 to 18,000 in March, but gained early half those losses by May, but with the uncertainty of the economy over the next couple of years, it’s tough to predict where the markets will fall in the long-term.

Despite all of the unknowns, there are constants. Here are four ways to make your retirement savings recession-proof.

  1. Don’t Panic

Even though 2008 was a bad time if you were planning to retire a year later, the best advice for most is to not panic and stick-out the tough times. By 2010, the economy was growing at pre-Great Recession levels, and by 2013, stock levels were back where they were five years earlier.

  1. Don’t Change Contribution Levels

If you’re close to retirement, you might be tempted to drop your contribution levels or sell off some stock when you see numbers drop, but resist the urge to do so. On the contrary, now is the time to be buying when the market is low.

  1. Diversify Assets

Try to build retirement assets that are not tied in to the market levels. These include gold, silver, real estate, farmland, money market funds, and cash values inside of life insurance policies.

  1. Consider a Roth IRA (If You Have Time)

If you think the stock market will rebound by time you retire, consider converting a traditional IRA into a Roth IRA. This allows you to convert more investment shares due to value of shares being lower. You’ll have to pay some taxes in the conversion process, but it should save you from a larger tax bill down the road.

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