Recessions can be a frightening thing to think about. We’ve heard horror stories of recessions past and families driven to poverty because of a swing in the economy. It isn’t something that we all spend much time thinking about, but it is certainly a possibility.
For retirees, this can be an especially difficult thing to think about. After all, when a recession hits, things could be okay for those who maintain their jobs and salaries. But for retirees, many depend on their investments as a source of income.
Surely there has to be some measure that can be taken by retirees in the event of a recession.
Taking a Defensive Position
Those in the last five years of working as well as the first five years of retirement, are known to be the fragile decade. It is called this because people in those years don’t have time to make up for big losses in a downturn.
The key here is to take something of a defensive position in order to protect their retirements against downturns. Things such as next-generation, low-cost annuities have been developed over the last few years with protecting investors in mind.
Getting through that fragile decade can be scary and uncertain, but taking those defensive positions can help ease the anxiety.
How to Protect Your Future Income
There is no magical way to stave off a recession. The key is planning ahead. Plan on converting an asset into an income stream starting at least ten years before you will begin drawing down those assets. This is to help protect against any downswings during that fragile decade.
To help protect your future retirement, think about buying a variable annuity with a guaranteed lifetime withdrawal benefit. The key here is to invest in a commission-free, low-cost variable annuity that has no surrender charges.
This provides a steady, guaranteed income, and it also comes with the ability to cancel and walk away at any point. This helps to protect you during a recession.