Here are 6 strategies to protect your finances against recession at any age

Like many Americans, you may fear that we are heading into a recession. More than 6 in 10 Americans – 62% – believe there will be a recession next year, according to the latest CNBC All America Economic Survey conducted in early July.

According to another report from MagnifyMoney, older Americans in their late 50s and beyond feel better prepared than younger generations to weather an impending recession. Yet overall, 68% of American adults feel financially unprepared at all, according to the survey.

Here are some strategies to protect your finances against recession, at any age.

The first step to securing your financial future is creating a plan to achieve your financial goals, from building an emergency fund to paying off student debt to buying your first home. Uncertainty about the economy may make you hesitant, but be determined.

Build your emergency fund

Make sure you have enough cash reserves to pay for unexpected expenses, like car repairs or medical issues, especially as these costs continue to rise. Direct deposit 10% of each paycheck into a high-yield savings account to build your cash reserves.

Financial advisers say your emergency fund should cover three to six months of living expenses. However, during a recession, you will probably want more cash. If you lose your job, it may take you up to a year to find a new one.

Savings rates are still low, but they are slowly rising. You may be able to earn 1% or more by saving in an online bank account. See rates on Bankrate.com or DepositAccounts.com.

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Strengthen your resume

If the economy is faltering, you want to make sure your greatest asset, your income, remains as stable as possible. Consider your marketable and transferable skills that can help you stay employed even in turbulent times.

According to ZipRecruiter, an overwhelming majority of employers — 93% — say “soft skills” also play a critical role in hiring decisions. He found key “soft skills” in job listings, including communication, customer service, planning and time management. List these skills on your resume and LinkedIn profile.

Technical abilities – or “technical skills” – are also important. Software development, data analysis, and digital marketing are some of the most in-demand “hard” skills on job boards. Learn or hone these skills. LinkedIn and other online platforms offer free courses.

At this point, you should be approaching or already in your prime earning years. You probably have more financial responsibilities than ever before – owning your own home, raising children, saving for your retirement. You need to have protections in place in case the economy – or life – throws you a curveball.

Obtain appropriate insurance coverage

Having sufficient insurance is one of the best ways to protect your financial life in these uncertain times. You should have a car policy, renter’s or homeowner’s insurance, and comprehensive health, disability, and life insurance coverage.

Check the coverage of your home insurance policy to make sure it covers reconstruction, and not just the current market value of the home. Home values ​​can drop during a recession. Also consider purchasing an “umbrella” policy to increase your liability coverage.

Remember to protect your income, your greatest asset. Research shows that you are more likely to become disabled than to die during your working years. If your employer offers disability insurance, get as much as you can. If you are self-employed, buy coverage yourself. Is it worth it.

In your 50s, you can finally start thinking about what life will be like when you stop working in your current job or field – and start a new chapter. Navigating the first “pages” can be a daunting task during a recession. Start preparing just in case.

Make “catch-up” contributions once eligible

At age 50, you can make additional contributions to your retirement savings accounts. It may be a good idea to top up your retirement accounts now if you already have a sufficient emergency fund.

With a “catch-up” contribution of $6,500, you could contribute up to $27,000 to a 401(k) or workplace pension plan this year. You can also set aside up to $7,000 in an IRA with an additional “catch-up” contribution of $1,000.

If you have a high-deductible health insurance policy, you can contribute up to $3,650 for single coverage and $7,300 for family coverage in a health savings account. People age 55 and over can contribute an additional $1,000 to a health savings account.

It’s almost time for your retirement – ​​or you may be enjoying it already. A recession could alter or postpone your plans for life after work.

Test your financial plan

See if your financial plan can withstand the stress of an economic downturn. Spend your next working vacation testing your retirement budget. What would you do everyday? How much money would you need to live on? If you can set a budget that can work when the markets are down and the economy is faltering, you should be in great shape when they improve.

Protect your wallet

Financial advisors often recommend young investors in their 20s and 30s to keep most, if not all, of their long-term investments in stocks because they have the advantage of time. Those in their 60s and nearing retirement, on the other hand, should be less aggressive and add bonds and cash for a bit more security.

Tax diversification is also important. Having a mix of tax-deferred, tax-exempt retirement assets (traditional plans and Roth IRAs and 401(k) or business accounts) as well as taxable accounts can be a smart strategy for having more flexibility as you go. as economic conditions change.

However, regardless of the economic situation, you shouldn’t have any money invested in the markets if it’s money you’ll need in the next five years. This should be the case whether the market is booming or we are in a recession.

For more tips on managing your money — no matter how old you are — register for Money 101 — a free 8-week financial freedom learning course, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.