Worried About a Recession? 3 Moves All Retirees Should Make Right Now.

By Maurie Backman – Mar 3, 2026 at 7:18AM ESTKey PointsBoosting cash reserves is key.Rebalancing could protect your portfolio.Examining your spending could make the tough choices easier.When you're working and you start to hear rumblings of a recession, it's natural to get pretty nervous. Recessions and job loss tend to go hand in hand, so it's common to feel jittery about the idea of an economic downturn. If you're retired, losing your job isn't necessarily something you have to worry about. But when the economy takes a tumble, the stock market can follow suit. And that's where your finances may be impacted. So if you're worried that a recession may not be too far off, here are some key moves to make. Image source: Getty Images. 1. Boost your cash reserves During retirement, you're likely living off of your IRA or 401(k), at least to some degree. If a recession hits and the stock market takes a dive, your best bet is to be able to leave your investments alone until the market recovers. And to do that, you need to have ample cash reserves. To that end, it's wise to aim for one to two years' worth of living costs in cash so you're not forced to sell investments when they're down. The good news is that savings account and CD rates are still decent, so you should be able to earn a modest return on your cash. If you don't have at least a year's worth of bills in cash, you may want to sell some investments while their value is up. 2. Make sure your portfolio is well balanced Your asset mix is an important thing to pay attention to once you're retired -- especially if you're worried about a recession. Make sure you're not overloaded with stocks if you expect a recession to happen in the near term. This doesn't mean you have to dump stocks completely. But you may want to swap some volatile growth stocks with more stable dividend stocks. But remember, if you're making portfolio changes, the key is to do so before a recession happens, not after. 3. Identify costs to reduce -- and make your peace with them If a recession happens, you may need to reduce your retirement spending on a temporary basis until things stabilize. It's a good idea to think about what that might look like ahead of time. Let's say you're worried about a recession later this year. You may not be able to lower your Medicare premiums or grocery bills, but you can potentially swap your European vacation for a more local trip that costs considerably less. You may also, in the course of examining your budget, identify some costs you can shrink now. Freeing up extra money could give you more peace of mind if you're worried that things will soon take a turn for the worse. A recession can hit differently for retirees than for people who are still working. But that doesn't make the idea of one less scary. The good news is that there are steps you can take right now to safeguard your finances in case the economy takes a negative turn. And the sooner you take action, the more peace of mind you might give yourself.Read NextMar 3, 2026 •By Dana George10 States Where Living on Social Security Alone Is Particularly Challenging, Even Without a MortgageMar 3, 2026 •By Maurie BackmanClaimed Social Security Too Early? This Lesser-Known Rule Could Help You Avoid a Lifelong Reduction in Benefits.Mar 2, 2026 •By Maurie BackmanThis Incredibly Simple IRA Move Could Lead to Much More SavingsMar 2, 2026 •By Kailey Hagen, CFPRetirement Taxes Will Be Less Painful for Seniors in This State Next YearMar 2, 2026 •By Maurie Backman3 Signs You're Not Getting the Most From Your 401(k)Mar 2, 2026 •By Kailey Hagen, CFPTrying to Get the $5,251 Max Social Security Benefit Is Overrated.

Do This Instead.About the AuthorMaurie Backman is a contributing Motley Fool retirement and Social Security expert with more than a decade of experience writing about personal finance, investing, and retirement planning. Maurie previously worked in finance analyzing distressed companies. She studied finance at Binghamton University.TMFBookNerd