6 Steps to Protect Your Retirement Savings

If you're looking to increase or preserve your retirement savings, this year has been a roller-coaster ride — and that's true whether you're still collecting a paycheck or you've already made your exit from the workforce.

Conflicting signals about the economy and the financial markets abound. Inflation is finally under control — no, wait, it may be ticking up again, the latest data suggests. Tariffs are on, then off, higher, then lower, on a continuous loop.

Stocks nosedived in April, then shot up to record highs. As for a possible recession? Economists keep changing their minds, with the latest forecasts putting the chances of a downturn in the next 12 months at 30% to 40%, down from as high as 60% earlier this year.

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Faced with these headwinds, many Americans are increasingly stressed about the potential impact on their financial security.

More than half of people ages 45 to 75 now say they're concerned about outliving their money in retirement — a jump of six percentage points from a year ago, according to a recent survey from the Alliance for Lifetime Income by LIMRA.

Nearly half of the pre-retirees and retirees polled are revisiting their retirement plans as a result, with moves that include postponing their retirement, cutting expenses and revamping their investment strategies.

While "stay the course" is standard advice in periods of economic and market turmoil, financial advisers say that reviewing your retirement plan and portfolio now, and tweaking as needed, is critical to ensure you're prepared for whatever comes.

"If you build in protections as part of the planning process, you're not dependent on the markets and the economy doing well to have a successful retirement," says Wade Pfau, a professor at the American College of Financial Services and author of Retirement Planning Guidebook. "Small adjustments can have a really big impact."

That advice feels particularly relevant in periods of heightened uncertainty such as now, when it's tough to know exactly which danger poses the greatest threat. Being proactive can not only help ensure that your savings last your lifetime but can also alleviate the anxiety that bubbles up for many people in the current environment.

"You can't control what the president will do about tariffs, how the Federal Reserve will act on interest rates or what happens in the Middle East," says Michelle Perry Higgins, a principal with California Financial Advisors in San Ramon, California, and a certified financial therapist. "But you can control the level of risk in your portfolio, how much you're spending and how you plan for life's what-ifs, which not only is good for you financially but helps lower your stress level as well."

Eager to protect your savings from the dangers that seem to be lurking everywhere lately? Financial advisers say that these are your best moves now.

1. Build a strong cash buffer

Your first line of defense in a shaky economic environment is to put together a runway of safe assets that you can tap to fund your living expenses if trouble hits.

That way, if a recession materializes that causes unemployment to jump or there's a prolonged downturn in the stock market, you won't need to pull money from your retirement portfolio at the worst time to pay your bills.

The biggest threat, if you're still working and are several years away from retirement: a lengthy bout of joblessness. That could push you into an early exit from the workforce, cutting years off contributions to a 401(k), or nudge you into taking a hardship withdrawal from your account.

Some 4.8% of 401(k) participants took such a withdrawal last year, up from just 1.7% in 2020, Vanguard reports — and that was when the economy was still robust.

A traditional emergency fund with enough cash to cover at least three months' worth of living expenses — stashed in a safe, liquid vehicle such as a money market account — is a solid starting point. But if the labor market weakens, six to 12 months is better, particularly if you're older.

Recently, according to the Bureau of Labor Statistics, workers ages 55 to 64 have required an average of 26 weeks to find a new job after a layoff, and people 65 and older have needed 32 weeks, compared with 19 weeks for employees ages 25 to 34. And those averages would likely rise in a recession.

But if you're planning to retire in five to 10 years, or you've been retired for a decade or less, the greater danger is a lengthy slump in stock prices.

"If a big bear market clocks your portfolio right at the outset and you don't have safer assets to spend from, you risk not having enough money left to recover when stocks eventually bounce back to sustain you for the rest of your retirement," says Christine Benz, director of personal finance and retirement planning at Morningstar and author of How to Retire.

A Morningstar study last year found that in simulated random trials, about 70% of the portfolios that ran out of money during a 30-year retirement involved retirees who had suffered losses in the first five years of tapping the accounts. The other 30% had gains in those early years but spent too much or experienced big enough losses later on that they ran out of money anyway.

What to do? Benz recommends shifting enough of your portfolio funds to cash to cover your spending needs for two years when combined with your income from other sources, such as a pension, Social Security or wages from part-time work. Keep another five to eight years of spending needs in fixed-income investments.

It's also a good idea to identify other assets outside of your portfolio that you could tap to help cover your bills in a down market, such as a cash-value life insurance policy or a reverse mortgage, Pfau advises.

"These buffer assets can be expensive," he says. "But even with the high fees, their value in helping to extend the life of your retirement investments gives you a better financial planning outcome in the end."

2. Fix your mix — a little

Small tweaks to ensure that you are appropriately diversified and have the right level of risk in your investments for your age and circumstances can go a long way toward extending the longevity of your retirement savings and giving you peace of mind.

"Big, heroic gestures are never the right move," says Benz. "If you build a portfolio plan you know is durable, then make small, periodic adjustments as needed, you don't have to respond to every economic headline, market move or inflationary shock that comes along."

If, for instance, you haven't rebalanced in a while, now is the time to do so, because the big run-up in stocks — not only this year but over the past decade — has probably altered your mix substantially.

Benz calculates that left untouched, a portfolio that was 60% in U.S. stocks and 40% in U.S. bonds 10 years ago would have shifted to 81% in stocks by the end of June.

This exercise is especially important if you're in the critical five- to 10-year period just before or after you stop working because of the damage a market swoon in those years can inflict.

"The biggest mistake I see people make is that they have too much risk in their portfolios when they start needing their money," says certified financial planner Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida. "Don't shoot the lights out trying to make more money in the market at the risk of losing a lot more."

McClanahan often recommends a portfolio split evenly between stocks and bonds for clients at this stage. That allocation historically has generated average gains of 8.2% a year, which is 1.5 percentage points less than the 9.7% annual returns from a more aggressive portfolio of 80% stocks and 20% bonds.

However, the more moderate blend has lost less, too. Its biggest one-year drop: 22.5%, compared with 34.9% for the more aggressive account.

You don't want to swing too far to bonds, though, because of another big risk: inflation. That's especially pertinent now, with many economists concerned that the widespread tariffs imposed by the Trump administration could cause inflation to reignite, although the impact on consumer prices has been muted so far.

"People often think the thing that could really wreck their retirement would be to lose a lot of money in the stock market," says retirement expert Anne Lester, former head of retirement solutions at J.P. Morgan Asset Management and author of Your Best Financial Life. "But inflation eroding how much your money can buy can be worse."

At a recent 2.7% rate, for instance, inflation will cut your purchasing power by half over the course of a typical 25- to 30-year retirement. If, as an analysis by the Federal Reserve Bank of Boston found, tariffs add an estimated one to two percentage points to that rate, it would take just 15 to 18 years to inflict the same damage.

Stocks, the only asset class that historically has beaten inflation by a comfortable margin, are still your best hedge against that outcome, says Peter Lazaroff, chief investment officer at Plancorp, a wealth management firm in St. Louis.

Research shows that all it takes is at least a 30% commitment to stocks in your portfolio to get that long-term protection, he says.

Benz also recommends layering in some inflation-protected securities in the fixed-income portion of your retirement savings.

You might, say, keep anywhere from one-fourth to one-third of your fixed-income holdings in Series I savings bonds and Treasury inflation-protected securities (TIPS), which adjust their rates twice a year to reflect changes in the Consumer Price Index.

This year has also driven home the importance of diversifying more generally, with international assets outpacing U.S. securities by a substantial margin for the first time in many years, notes Lazaroff. He recommends keeping 20% to 30% of your stocks in international holdings and choosing bond funds that include international exposure as well.

"There's a mathematical reason why diversification reduces volatility and returns compound better at lower volatility," Lazaroff says. "But it's also just an exercise in humility, saying we don't know what's going to happen. If you spread your bets, no one thing can topple your entire investment plan."

3. Adapt your spending

In response to growing concerns about the economy, two-thirds of Americans ages 18 to 65 are cutting back on spending, according to a summer survey by Life360, an information technology company. Dining out, online shopping and travel lead the list of expenses on the chopping block.

Meanwhile, 41% of retirees in the Alliance for Lifetime Income survey said they are looking to spend less as well.

It's a smart move, financial advisers say. During your working years, every dollar you don't spend is one you can direct toward saving, either to build up your cash reserves or bulk up retirement accounts. And if you're already retired, every dollar you don't spend is one less you need to pull from savings when stock prices may be down.

McClanahan suggests identifying expenses that you could pare back in advance of another market meltdown or downturn in the economy, even if you're financially comfortable now.

"You don't have to make any changes yet," she says. “But this way, if the world goes crazy and your returns go south, you already have a plan in place."

Conversely, McClanahan also encourages her retired clients to spend more, within reason, when markets are surging.

"Need a new car? Want to take that bucket-list trip? When the market is doing great, it's a good time to take money off the table and do those things," says McClanahan, a former emergency room doctor. "You never know if or when illness or other events will upend your life. So, while you need to plan financially so that your money will last a long time, you also want to make sure you're enjoying your money along the way."

That kind of adaptability to economic and market conditions can greatly extend the life of your retirement portfolio, research shows. Says Benz: "Flexibility is a superpower for retirees."

Among the flexible withdrawal strategies that research has shown to be most effective in helping your money last longer, Pfau says, is installing upper and lower limits on your withdrawals (often called guardrails), depending on how the market is faring.

Rather than following the standard advice to withdraw 4% initially in retirement, then adjust that amount annually for inflation, he says, you might instead take out only, say, 3% from retirement savings in bad years for stocks, but as much as 5% when the market is on an upswing. Another simple option: Give up the inflation raise when stocks are down.

"These small adjustments can have a dramatic impact on the longevity of your assets," says Pfau. "The more flexibility you have to make these adjustments, the easier it is to weather any storm."

4. Don't let fear drive your decisions

Exacerbating the recent stress about the economy is growing anxiety about Social Security. Some 58% of respondents in the Alliance for Lifetime Income survey expressed concern that Social Security benefits will eventually be reduced. As a result, 34% of pre-retirees are considering claiming earlier than planned.

Evidence suggests that's already happening. Initial claims are up 13% so far this year, to nearly 3 million — more than triple the usual rate of increase.

A recent Urban Institute analysis also found that the Social Security Administration has received more early claims in 2025 from higher earners, especially at age 62, than in previous years, concluding that recent staff cuts and policy changes contributed to the numbers by causing fear and confusion among future recipients.

Adding to the concerns: The most recent report on Social Security's financial health indicates that the primary trust fund that pays retiree benefits will run out of money in 2033, failing government action to prevent a shortfall, at which point only 77% of benefits will be paid.

All the worry is understandable, but financial advisers urge that pre-retirees and retirees who have yet to take benefits not act on it.

"If Congress doesn't do something, you're going to get a 23% reduction in benefits, no matter what," says certified financial planner Lee Baker, founder and president of Apex Financial Services in Atlanta. "But if you've claimed early, you'll be facing a double reduction because of the hit you're already taking on Social Security benefits before your full retirement age."

That hit is a hefty one. For every month you collect before your full retirement age, your payments are permanently reduced by a small percentage, which can really add up over time. Depending on when you were born, claiming at age 62 instead of your full retirement age, for instance, will lower your benefits by 20% to 30%, the Social Security Administration reports.

If instead you delay beyond full retirement age, your benefits increase by 8% a year until you turn 70. All told, your monthly payments will be 76% higher if you claim at age 70 instead of age 62, according to Boston University economist Laurence Kotlikoff, founder of Maximize My Social Security, an online tool to help with claiming decisions.

Still, the decision to postpone benefits until 70 is not entirely a slam dunk. Your health, family circumstances and how you would pay your expenses until you begin collecting also affect your timing.

Morningstar research shows, for example, that if you can rely on income from work, a pension or other non-investment sources to cover your bills while you wait, delaying Social Security until age 70 will generally leave you in the strongest financial position over the course of your retirement.

But if you'd need to withdraw money from your portfolio to pay your expenses, the decision is less clear. The study showed that someone who retired and started collecting Social Security at 67 fared slightly better financially during a 30-year retirement than someone who waited until 70 but had to cash in investments until then to make ends meet.

5. Keep your hand in

There are plenty of good reasons to work longer. Besides helping you bridge the years until you collect Social Security without breaking into your nest egg, it gives you more years to save, shortens the number of years those savings have to last and reduces the chances you'll be forced to tap your portfolio during a market downturn. "Your human capital is your safest asset," McClanahan says.

Given all the benefits, it's not exactly a shocker that many people these days are embracing the work-longer approach. Both the average retirement age and the percentage of people 65 and older in the workforce have been steadily creeping up, the Center for Retirement Research at Boston College reports.

And many people plan to keep drawing a paycheck after they've quit their career job: A recent Northwestern Mutual study found that 48% of Gen Xers and 30% of baby boomers plan to work or are already working in retirement.

Of course, keeping a job isn't always in your control; health problems and layoffs often force older workers into retirement earlier than planned. Then, too, after an adult lifetime spent toiling 40 or more hours a week and answering to a boss, you may simply not want to work that much or that hard anymore.

Working longer, though, doesn't have to mean working as hard as you did at the peak of your career. Part-time or occasional freelance work can allow you to postpone withdrawals from savings, take less money out when you do, and provide an income bridge that allows you to delay Social Security.

You may be able to find opportunities at websites such as RetirementJobs.com, SideHusl.com and Upwork.com.

"Find something you're passionate about to supplement your income," says Baker. One of his clients, a pickleball fan, earns extra money by coordinating local championship matches. Another, who is more than comfortable financially, works part-time at Trader Joe's just because he thinks it's a cool place.

"Working some in retirement is not just helpful for the nuts and bolts of financial planning," says Baker. "Staying engaged and interacting with people is incredibly helpful for your physical and mental well-being, too."

6. Consider the what-ifs

What's the worst that could happen if a recession, prolonged bear market or spike in inflation comes to pass?

Although it may seem counterintuitive, thinking about how the economic scenarios that worry you could play out and how you would manage the personal fallout can be an anxiety-reducing exercise, advisers say.

"You want to consider emergency decisions when you're not in an actual emergency and can think strategically, not from a place of heightened emotion or panic," says Lester. "It's why we do fire drills."

Take the market outlook, for example. While stock prices bounced back quickly this year from their April slump, a downturn historically is more likely to last about 18 months, and stock prices were down or sideways for more than a decade in the 1970s and early 1980s.

"That's not a probability now, but it is a possibility, so maybe that belongs on your bingo card," says Lester, noting the point of the exercise is not to scare you but to prepare you.

In this case, she says, in addition to making sure your portfolio doesn't have too much risk and you're well diversified, you might want to think about adding an immediate annuity to your mix so that you have a source of steady income outside of your investment portfolio (you can find options at immediateannuities.com).

Higgins suggests that you also think about the trade-offs you might be willing to make if, as a result of renewed inflation or a bad bear market, you can't cover your spending at current levels.

"Ask yourself what you would be willing to change," she says. "Could you work two more years than you planned? Where could you cut expenses? Are you willing to downsize? You want to go into the storm with a plan."

Realizing you have a variety of options is crucial not just to be prepared financially but for your peace of mind as well. "There are a lot of tools you can use, not just one solution," says Pfau. "The key is to think ahead about how the different tools fit together so they can help you build a stronger foundation for your retirement."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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