Is It Possible to Recession-Proof Retirement?

That was a tough time for people who had just retired, but since that time stocks have rebounded in a spectacular manner. However, says Money in the article “This is the Best Way to Recession-Proof Your Retirement, According to Experts,” it is possible that the long rally may be coming to an end.

Is there anything that can be done do to protect your retirement accounts from the next financial disaster? Those who are closest to retirement, are always the most vulnerable to drops in the stock market, and those who are retired and drawing down savings are even more at risk. However, you can build a financial buffer to help your retirement funds survive any downturns.

No one knows when the next recession or stock slide will occur. There will always be one, so it’s best to be prepared. It’s simply an acknowledgement of the real risks of markets. On average, recessions last about 18 months. What can you do?

Build a cushion. Commit to building an emergency fund. That should be three to six months of expenses. And it doesn’t matter how rock solid or large your retirement investments are. If you take money out prematurely, it’s going to weaken your portfolio.

Pay down all debt, or as much as possible. That is key to feeling fiscally secure, once you leave the workforce. This is because less of your assets are tied up in long-term retirement investments. Tackle the highest interest rate debt first.

It’s far easier to adjust discretionary expenses, than it is to add cash to a stockpile. You can skip a vacation. You can’t skip a mortgage payment.

Depending on how close you are to retirement, consider tweaking your investment portfolio.  Portfolios can become unbalanced over time, as assets in different classes grow or fund managers change. Review your portfolio to limit your exposure to volatility. Scrub out any unnecessary risk. That may include putting some money in cash or cash equivalents, like savings accounts, CDs and short-term bond funds.

You don’t have to be very conservative on the entire portfolio. People nearing retirement age usually trim some of their stock holdings. It is not now as black and white. You’ll need stock growth to outpace inflation, so your equity allocation must be fine-tuned.

Many retirees are working part time jobs to keep some cash coming in and minimize what they take from retirement accounts. If you’re earning enough to live on, you can even avoid taking any distributions, except those that are required. Be aware of how your income impacts your Social Security benefits and taxes, if you have already started to take benefits.

There are other advantages to working part time. It keeps you active and engaged with others,  allows your mind to stay sharp and offers the opportunity to socialize with new people.

Finally, make sure your estate plan is in place. You should have a will, power of attorney and healthcare power of attorney. An estate planning attorney can help protect you and your family, regardless of when the next recession arrives.

Reference: Money (March 13, 2019) “This is the Best Way to Recession-Proof Your Retirement, According to Experts”

Which States Roll Out the Red Carpet for Seniors

Some states are far more welcoming to seniors than other states. If you are thinking about relocating when you retire, you need to know which places provide services and amenities and address the issues that can make your life easier. Become aware of things that will impact your well-being as you age, so you can determine which states roll out the carpet for seniors.

Questions You Should Ask Before Deciding Where to Move

Many people choose a place to retire, because they always wanted to live in that state or area. While that is a valid reason, you should dig a little deeper to make sure you will be happy and comfortable, if you move there. Some of the topics to explore before taking the plunge include:

  • Is public transportation available? Find out if it is accessible, in case you have or develop mobility issues. See if it is affordable, and whether it serves the places in town where you will want to go.
  • Check out the public parks and walking trails. Walking is an excellent form of exercise and fresh air. Getting out of the house can prevent social isolation.
  • Are there social opportunities for older adults? Explore the number of senior centers and their activities. “Age-friendly” communities often host senior activities through the local government, public library or parks and recreation department.
  • How convenient is the medical care? You do not want to have to drive 30 miles each way to see a good doctor or 100 miles for a trauma hospital.
  • Check out the housing costs. You might have wanted to live in San Jose, California ever since you first heard the song, but as one of the most expensive places in America to live, you might not be able to afford housing there.
  • What are your employment prospects? Many older adults want or need to work part-time. Is the local community friendly toward mature workers?

States That Invest in Senior Life Issues

If a state is a member of the AARP Network of Age-Friendly States and Communities, it will address issues that are relevant to the well-being of mature residents. These communities work on the social, economic and environmental factors that can impact your safety, comfort and health.

The network does not limit membership to states. Towns, cities, and counties are part of the network to provide resources that improve the quality of life for seniors. Communities in the network might not be as age-friendly as they would like to be, but they are pushing forward with initiatives to improve things for their older residents.

The network currently has four states (Florida, Massachusetts, Colorado and New York) and 368 communities across the country as members. These areas have made a commitment to make life better for their seniors and people of all ages. Network members evaluate their local needs and create action plans to address those needs.

Members of the network tackle such issues as:

  • How welcoming and friendly the area is to older adults,
  • Safe bike paths, lanes and trails,
  • Compliant sidewalks, curbs, pedestrian walkways and streets,
  • Economic opportunities for seniors to own businesses or get jobs,
  • Affordable housing, including non-traditional “tiny” houses,
  • Public health services,
  • Public places and outdoor spaces,
  • Social activities, and
  • Transportation.

When it comes to retirement, look before you leap!


AARP. “What You Need to Know About Age-Friendly States.” (accessed May 22, 2019)

AARP. “AARP Network of Age-Friendly States and Communities.” (accessed May 23, 2019)

Even a Late Start toward Retirement is Better than None at All

There are also people who wait until they become senior citizens to begin planning for retirement. That’s a little on the late side, but the important thing, says the article “Retirement Planning: Start now to help Social Security, Medicare” from Martinsville Bulletin, is to get started. That’s better than doing nothing.

It’s easier if you start earlier. Let’s consider the high school student who diligently puts away 10% of a $7.25 per hour gross minimum wage earning for a year on an average 20-hour work week. That’s $750 into a retirement plan after one year. If that student never went to college, never learned a trade, got a raise or a promotion, they would still have $34,600 in personal savings in 46 years. It’s not a lot, as retirement savings go, but it’s better than nothing.

If the same high school student put those savings into an Individual Retirement Account (IRA), more would have been saved. The more time your money has to grow through compounding, the more money you’ll have.

Saving a little money every month could make a big difference later on. This year, the average monthly Social Security benefit rounds out at about $1,460 per person, calculated by combining a worker’s highest paid years in the workplace. That’s not enough for retirement. The answer? Start saving early.

It is not as easy to build a nest egg in a few years, but it’s possible.

Many people don’t wake up to the reality of retirement, until they reach age 62. There’s still time to plan. They can put money into IRA accounts, and at age 62 they can save as much as $7,000. Those IRA contributions count as tax deductions.

Roth IRAs are a little more flexible, but there are no tax deductions with contributions. On the plus side, when money is withdrawn, you’re not paying taxes on the withdrawals.

Another important planning point for seniors: if you’ve had health issues, it’s a good idea to keep working to maintain your employee health insurance. The healthier you are, the lower your health insurance costs will be during retirement. However, health costs do tend to increase with age, so that has to be factored into your retirement planning.

For people who take a lot of medication to control chronic conditions, they’ll need to look into health insurance outside of the workplace. That usually means Medicare. Most seniors are eligible for free Medicare hospital insurance, which is Part A of a four-part option, if they have worked and paid Medicare taxes.

Part A helps pay for inpatient care in a hospital or skilled nursing facility after a hospital stay, some home health care and hospice care. Part B helps to pay for doctors and a variety of other services. Part C allows HMO, PPO and other health care organizations to offer health insurance plans for Medicare beneficiaries. Part D provides prescription drug benefits through private insurance companies.

The Social Security Administration advises people to apply for Medicare three months before they celebrate their 65th birthday, regardless of whether they plan to start receiving retirement benefits right away.

Whether you’re 26 or 56, you need to plan for retirement. You also need to have an estate plan, and that means making the time to meet with an experienced estate planning professional to discuss your life and your retirement plans. You’ll need their guidance to create a will and other documents.

Advance planning will always be better than waiting until the last minute, for retirement and estate planning.

Reference: Martinsville Bulletin (May 17, 2019) “Retirement Planning: Start now to help Social Security, Medicare”