How to protect yourself from a recession


Planning to avoid severe losses is perhaps the most important aspect of your retirement strategy.

If you had to retire today, could you withstand a 20% blow to your investment portfolio (30% if you count inflation)? Our current market has compelled me to reiterate this to all my clients: You must build in some downside protection!! Everything is at stake when you get close to retirement age, and for that reason, it is vitally important that you cover your bases. You can spend your entire life working hard and diligently saving, but what if you are 65 and see a couple of bad years? A down market close to your retirement could be detrimental to the quality of your life in your golden years or cause you to work longer.  

This risk is called the sequence of returns risk and it can wreak havoc on your retirement earnings.

In a nutshell, it states that if you are relying on withdrawals from your investments during retirement, it is crucial that you see a positive pattern of returns in the early years of your retirement. If you don’t, your investment account will be drained far too quickly, and you will need to figure out other income sources to survive. Could you imagine being forced back to work mid-retirement? I would hate to see this situation happen to anyone. It is my goal to help people retire happy and live out everything they imagine doing in retirement. To that end, you must take steps now to preserve your investments in the future. The first step is always to build a diversified portfolio that will help protect you from market volatility. Another strategy is to use target date funds, which manage your allocation risk, by moving you to more conservative investments as you get older. Once you are in retirement, a three-bucket strategy can help you manage your cash flow and withstand short-term dips by preventing the need to sell low in order to cover monthly expenses. Utilizing unique assets, like buffered ETFs, within your equity portfolio can further protect your return by partially shielding you from losses. Fixed annuities and buffered variable annuities, when appropriate, can also play an important role in providing a stable monthly income in retirement.  

Isn’t it better to attack the root of the problem?

These are all powerful tools that should absolutely be used to manage the risk in your portfolio, but why not use one instrument that a recession couldn’t touch? There is no better solution than an Indexed Universal Life insurance policy!! It offers you the chance to capture market gains, with a ceiling, and 100% protection from any market loss. When properly funded, an IUL will provide you with income in retirement that is not subject to market risk or sequence of returns risk, and is completely tax-free! A permanent life insurance policy that provides safety for your loved ones, with chronic, critical, and terminal illness protection transfers your risk to the insurance company! When we are talking about protecting your retirement and the people that matter most to you, and keeping the IRS out of your retirement income, Indexed Universal Life is really hard to beat!  

This is what drives me in my professional career.

I want to help everyone live a long, comfortable retirement that is not hindered by a lack of foresight. Building downside protection into your portfolio will create a durable foundation and give you the peace of mind that, even in the worst-case scenario, you know you’ll never have to worry. Give me a call today and let me show you the path to retiring carefree.  

About the Author

  • Jeff Geraci

    Jeff Geraci grew up all over the world in a military family, and spent 5 years on active duty. While serving, he felt the tug between planning for financial independence with a limited income, and an all-consuming job. That’s when he decided that with a financial plan and a mentor, a service member could be successful in his career and finances! Military members are decisive, family-oriented, and really too busy to keep up with the changing financial world: the psychographics matched, people with military experience were an ideal community to serve!

Jeff Geraci

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