written by:

John Shrewsbury
Owner | Financial Advisor

I remember it like it happened yesterday…

watching the stock market fall hundreds of points for many consecutive days.  It was the Great Recession of 2008 and one of the steepest market declines on record.  Hard to believe, but it’s been over 10 years since that turmoil tarnished our outlook on the free enterprise system and caused many investors to go into “the bunker” with their tolerance for risk.

Happier days, however, were ahead. Unless we have an unforeseen downturn, we will likely celebrate a full 10 years of the bull market on March 9th of this year.  A decade ago, the Dow was around 6,500 and that is where the bull run began that took us over 26,800 before the recent pullback.  It has been a spectacular run.

But, the recent correction in November and December reminds us that the bear is always lurking, and with that reminder is the admonition to always be prepared.  With the markets going up, it is easy to forget about the hardships we faced in the last recession.  Statistics show that we might have forgotten many of the lessons the Great Recession taught us.

For example:

  • The Federal Reserve has reported that about 40% of us can’t cover a $400 expense with cash. (That means it goes on the credit card when it happens…and you know it will.)
  • Even in this strong economy, we haven’t learned to save well since 49% of us are living paycheck to paycheck.
  • Despite the bull market, less than 40% of those of us with any retirement savings think we are on track, and 25% have saved NOTHING AT ALL!
  • And the biggest surprise, 68% of people have no recession investment strategy, even though most strategists will tell you that a pull-back is not far off.

It seems like never before have the expectations of an economic slowdown been more prevalent and our retirement savings been less prepared.

But it’s not too late.

Here are a few things you can do now to prepare for “the next one.”

  1. Get back to the basics. Budgeting and savings became the “in vogue” thing to do during the last recession.  It never should have gone out of style.  Budgeting is for all-the-time, not just times of panic.
  2. Get a plan. When things get crazy, you will really be thankful that you spent the time to sit down with a financial advisor and thought with a clear head about the right moves to make BEFORE the next trouble spot arises.
  3. Get an emergency fund. During times of trouble, cash is king.  Not only can you buy your way out of a difficult position with a large stash of cash, but you can also take advantage of the opportunity.  During the last recession, many people with cash were able to buy homes and other assets from those who were having to unload these items at fire-sale prices.
  4. Get your basic needs covered by guaranteed income during retirement. One of the foundations of the GenWealth Ready to Retire Process is the strategy of meeting your essential living expenses with regular, predictable income from sources like Social Security, pensions, and the like.  What if your income doesn’t meet your expenses?  That’s when you seek the help of a financial advisor to guide you through the decision-making process of the options you might have to add to the income mix.

We don’t know for certain whether “the next one” is right around the corner or many months away.  What we do know is that the time to fix the roof is when the sun is shining…and there are clouds gathering on the horizon.

Are You Ready For The Next One

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

Source: https://www.jackson.com/financialfreedomstudio/articles/2018/09/is-your-retirement-income-recession-proof.html