3 Tips for Protecting Your Retirement Income In a Volatile Economy

Between market volatility, an extreme real estate market, the debt ceiling negotiations – many people are feeling anxious about their retirement plans. 

The best way to combat those fears and anxieties is to have a plan in place beforehand, so that when things do go south economically, you don’t spend your nights wondering if your retirement savings will follow. 

But retirement planning isn’t just about saving money for your golden years; it’s also about creating a plan for how and when you intend to use that money by creating a retirement income plan. Today, we’re walking through the basics of a retirement income plan, as well as tips for protecting your retirement long-term. 

What is Retirement Income?

Even in retirement, you’ll have some sort of income stream – possibly multiple. That could include Social Security, pensions, a side job, and/or withdrawals from your retirement accounts. The good news is that you can usually figure out what the bulk of your income in retirement will be ahead of time – allowing you to make a retirement income budget for your future.

While creating that plan, it’s important to think ahead about how much you’ll need each month, and how much you’ll be receiving from each of those income streams. Usually, retirement income needs depend on your retirement expenses – i.e., a retirement full of travel and luxury will need more income than a retirement spent gardening. 

Once you have a plan in place, there’s still more work to be done: saving for and protecting that future against economic uncertainty.

3 Tips to Help Protect Your Retirement During Market Upheaval

As you explore the retirement planning solutions available to you and your family, be sure to keep these three tips in mind to help protect your future.

1. Diversify your portfolio

Portfolio diversification is all about balancing out risks to give you the best chance of success. 

Think about it from this perspective: You probably wouldn’t want to put all your money in one stock, because if the company went under, you’d lose everything.

Rather, a good diversification strategy involves several different kinds of investments with varying risks. That could include an assortment of stocks, bonds, real estate or other investment types. Within those investment vehicles, you can also diversify your portfolio by investing in a variety of industries (for example, buying a tech-based stock as well as stocks from a travel agency).

If the economy does turn downward, the hope is that not all your investments will be equally affected – some might fall, but others could weather the storm just fine. 

2. Keep your emergency fund funded (even in retirement)

An emergency fund ensures that you have a safety net in the event of the unexpected – yet many people forget that you’ll need an emergency fund even in retirement! 

In fact, the elderly may actually be more vulnerable to financial insecurity due to unexpected injuries, financial fraud or other costly emergencies. The National Council on Aging states that over 15 million elderly in the United States are economically insecure as of July 2022 – that’s nearly one in three!

Including an emergency fund in your retirement plan can help ensure you and your family members remain financially stable in your later years, helping to cover basic costs during tough times.

3. Avoid impulsive decisions

If something were to happen that causes your investments to take a sudden turn for the worse, it can set off your panic radar. Couple that with the explosive headlines and dooms-dayers, and it’s enough to make anyone second guess their investments. 

However, the best thing to do in these situations is to keep your cool and avoid any impulse-driven decisions. 

Remember: The news is trying to get an emotional reaction from you, and no one (not even your favorite news channel) can predict what markets will or won’t do. If there is an economic disaster, history shows us that we can always recover – it just takes time. 

In fact, a recent study reported on by CNBC found that “the market’s best days often follow the biggest drops, so panic selling can significantly lower returns for longer-term investors by causing them to miss the best days.”

In most cases, your best bet is to stay the course and keep on track with your retirement plan.

Bonus tip: Talk to a professional retirement planning consultant

A professional financial planner can help you weigh the risks when crafting your retirement income plan. They can also help you reassess and rebalance your portfolio when necessary.

 If you haven’t already, now is a great time to connect with a financial professional and discuss your retirement planning options and protect your retirement. In the meantime, these three tips can help you get started on the right foot. 

Plan for Your Future with Clarity

Here at Clarity, we know that the best retirement plans consider all outcomes – and prepare for success regardless of external factors. Click here to connect with a member of our team and get started today. 


Latest Posts

The Millionaire-Next-Door’s Guide to Safeguarding Wealth

The Millionaire-Next-Door’s Guide to Safeguarding Wealth

After years of hard work, smart savings decisions, and a commitment to living below your means, you’ve finally reached that coveted “millionaire-next-door” status – but now what? When your net worth crosses the million-dollar threshold, you’re in the top 3% of all...