9 Ways Social Security Recipients Can Prepare for a Recession

People receiving Social Security retirement benefits might be nervous about rumblings of a “possible” recession, especially those still working part-time. While the economy isn’t in a recession yet, recent dips in the stock market, reports of lower profits in several sectors and the uncertainty of the forthcoming presidential election are sowing unease.

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The benefits people already receive aren’t likely to change, but an economic downturn affects other income streams, investment accounts and more. While people wait to see what happens next, here are nine steps people on Social Security can take to prepare in case the economy declines.

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Make Sure You Have an Emergency Fund

Though Social Security income is fixed, household budgets are strained in downturns, according to Lauren Grayes, founder of Wealth Gems Financial . Putting extra funds aside is never a bad idea.

“Prepare with an emergency fund to cover six months to a year of essential costs. Take action today and you’ll rest easier knowing you can steer any challenges ahead.” Grayes said.

Review and Adjust Your Budget

Now is also a good time to evaluate how much you’re spending and identify areas where you may need to cut down, according to Dayten Rynsburger, chief revenue officer of Niche Capital CO .

“Any additional funds should be directed towards either savings or debt clearing,” he said.

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Pay Off High-Interest Debt

Grayes sees how people struggle during economic downturns, but it doesn’t have to be that way if you ensure your financial habits aren’t holding you back.

“My advice: focus on paying off high-interest debts now while the economy is strong. This minimizes bills and provides more cash flow flexibility later,” Grayes said.

“A lower debt burden means fewer liabilities whenever your income level declines,” Rynsburger added.

Beef Up Income Streams

If you’re starting to wind down any part-time work, it might be a better idea to hang on to it a while longer, or, Grayes suggested, add an income stream.

“Develop multiple income streams in case your part-time work dries up. Offer services that provide value like virtual assistance, driving for rideshares, or online surveys and market research,” she said.

Better yet, Abid Salahi, co-founder of FinlyWealth , suggests investing in passive income opportunities, like dividend-paying stocks or rental properties.

“Some innovative retirees have monetized their skills through online platforms, creating recession-resistant side hustles,” Salahi said.

Reassess and Rebalance Your Portfolio

Reassessing and potentially rebalancing investment portfolios is another crucial step in case things take a turn.

“While conventional wisdom suggests a conservative approach as one ages, maintaining some exposure to growth assets can help combat inflation, which often accelerates during recessions,” Salahi said.

He said a balanced portfolio of 60% bonds and 40% stocks has historically provided stability while offering growth potential.

Keep Connections Alive

Additionally, Grayes recommended staying active in your community by volunteering or starting a hobby business not only for financial reasons.

“Mental and social connections provide security during hard times,” she said.

Stay Informed

It’s also a good idea to monitor economic patterns closely or follow financial experts who break this information down, so you can adjust your financial plans accordingly.

“By doing so, you prepare yourself for any challenges that might arise soon,” Rynsburger said.

Consider Taking Social Security Early

If you won’t keep up any part-time work and don’t foresee any other income streams, consider taking Social Security earlier than full retirement age. At least you can count on that money no matter what happens economically.

Reduce Expenses

Don’t wait until you’re scrambling to cut costs — reduce your expenses now.

“Negotiating better rates on insurance policies, considering downsizing, or exploring senior discounts can save hundreds of dollars monthly. This extra cash can be redirected to emergency savings or debt reduction, further fortifying one’s financial position,” Salahi said.

The key to being prepared is to be proactive. By implementing these strategies, Social Security recipients can create a financial buffer capable of withstanding recessionary pressures.

This article originally appeared on GOBankingRates.com : 9 Ways Social Security Recipients Can Prepare for a Recession