Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Economists have opposing views on whether the U.S. is headed toward a recession, with some experts saying we’re in a K-shaped economy — a term describing the divide between the rich and poor. That K-shaped economy can make lower-income Americans feel like they’re in a recession already (1). Retired investment strategist Jim Paulsen believes the tech industry is boosting the country’s GDP, but otherwise, most of the U.S. is in a recession (2).
If you’re retired or nearing retirement, you might be nervous about a recession affecting your hard-earned savings. If the stock market plummets, you don’t want to lose money by selling shares for a loss. Here are five ways to protect your wealth ahead of possible troubled turbulent waters.
Top Picks
1. Check that you own dividend stocks
One way to earn money in the stock market is to buy shares of stocks and wait for their value to grow. Another way is to invest in dividend stocks. These may also gain value, but they also pay you cash, known as dividends, typically once per quarter.
Dividend stocks are relatively low risk and the stocks’ values might not grow as quickly as other types of stocks because these companies use their extra cash to pay investors rather than necessarily reinvesting in their businesses. However, these safer stocks can be great for older investors who aren’t looking to take on a lot of risk.
These companies aren’t required to pay dividends if their businesses aren’t doing well. So, buying reliable dividend stocks that tend to perform well in all types of economic climates can make it more likely that you’ll receive dividend payments.
Take Coca-Cola (NYSE: KO) as an example. While Coca-Cola isn’t necessarily the best stock for every investor, it’s known as a strong dividend stock because it has been increasing its dividends for decades (3).
Automate your contributions
You might consider investing in this asset through exchange-traded funds (ETFs) dedicated to dividend-paying stocks. Dividend ETFs provide a powerful blend of consistent income generation and long-term capital growth. They offer instant diversification and may help offset market volatility in the face of a potential recession.
One great way to invest in dividend ETFs is through a personal finance app that enables you to automate your contributions — which can then accelerate your retirement investments.
After all, when your investing happens first, before bills or impulse spending, you can consistently build your nest egg without having to think about it.
Platforms like Stash make this incredibly straightforward.
With over 1 million active subscribers and more than $5 billion in assets under management, the intuitive app lets you set daily, weekly or monthly recurring investments that fit your cash flow.
You can build a diversified portfolio in just a few clicks using its award-winning Smart Portfolio, which adjusts your investment mix based on your goals and risk level. Prefer a more hands-on approach? You can also choose your own stocks and ETFs, or combine both styles.
And if catching up on retirement is a priority, a Stash+ subscription offers 3% IRA matching, which can give your contributions an extra boost.
You can set up a recurring deposit in just a few minutes and steadily build your nest egg on autopilot.
Plus, you can get a $25 bonus investment when you fund a new Stash account with $5, plus a 3-month trial to explore the platform.*
*All investments are subject to risk and may lose value. View important disclosures. Offer is subject to T&Cs.
Read More: Here’s the average income of Americans by age in 2026. Are you falling behind?
2. Keep enough cash in a high-yield account
If you tie up too much of your money in investments, you put yourself in a tricky spot if you need a large sum of cash later. You want to avoid being forced into selling investments when the market is down.
The amount you set aside is ultimately up to you, but consider keeping one to two years of necessary living expenses in some sort of savings account.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s 10 times the national deposit savings rate, according to the FDIC’s May report (4).
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
3. Create a bond ladder
If you own bonds — or are interested in investing in them — building a “bond ladder” is a smart strategy for minimizing risk in retirement. Picture your bond as a ladder and each maturity date as a rung.
Let’s say you have bonds with maturity dates of two, five, eight and 10 years. When your first bond reaches maturity in two years, you reinvest that money into another 10-year bond to keep your “ladder” stable and moving upward.
The ladder approach provides you with a consistent source of revenue. If you buy all of your bonds around the same time, you risk locking in a super-low rate on all of these investments. But staggering your bond maturity dates provides you with interest rate diversity.
Invest in bond ETFs
Another way to reap the rewards of this asset class is through ETFs that invest in bonds. Bond ETFs allow you to buy a bundle of bonds all at once — no need to painstakingly construct a portfolio of individual bonds. This makes it a more straightforward way to invest in fixed-income securities.
And with easy-to-use DIY investing platforms like SoFi, you can buy stocks, bond and Treasury ETFs and more with no commission fees and no account minimums.
SoFi is designed for both beginners and seasoned investors, with real-time investing news, curated content and the data you need to make smart decisions about the stocks and ETFs that matter most to you.
Plus, for a limited time you can get up to $1,000 in stock when you fund a new account.
4. Add Treasury inflation-protected securities (TIPS) to your portfolio
Inflation can be a driving factor of a recession. Your money doesn’t stretch as far when inflation increases and some stock values will tumble. One way to protect yourself from inflation is to invest in Treasury inflation-protected securities, or TIPs.
TIPS are government bonds with variable interest rates that readjust every six months. They also pay interest on the new principal and this compounding strategy helps your money grow. You can buy TIPS with a five-year, 10-year or 30-year term (5). These securities pay lower rates than corporate bonds, but they’re also less risky, which is ideal during a recession.
5. Receive regular payments through annuities
An annuity is a type of investment through an insurance company. It can help you increase your retirement fund or work as a guaranteed stream of income.
With an income annuity, you make an initial investment, then receive monthly, quarterly or annual payments. A tax-deferred annuity allows your funds to grow in the account and you won’t pay taxes until you take out the money.
You may consider investing in an income annuity to receive ongoing, regular payments. If you have a tax-deferred annuity, you might decide to receive payments or take withdrawals, each of which has its own tax implications. Annuities aren’t for everyone, but they’re worth considering, especially if you’re worried about income during a potential recession.
Consult a financial advisor
It’s crucial to speak with a financial advisor about these options for protecting your retirement fund. They’ll explain details you might not fully understand, including any insights about how the economy is doing overall.
And for investors with portfolios of $250,000 or more, financial decisions can become even more nuanced. Managing withdrawals, minimizing tax exposure and ensuring long-term sustainability often requires greater coordination and strategic planning.
In these cases, working with a financial advisor can help reduce costly mistakes.
If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio. From there, WiserAdvisor will review its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
You can then schedule no-obligation consultations with your matches to determine the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties and specific financial results are not guaranteed.
– With files from Laura Grace Tarpley.
You May Also Like
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Marketplace (1); @jimpaulsen (2); MarketChameleon (3); FDIC (4); TreasuryDirect (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
