May 24, 2026
Economists have opposing views on whether the U.S. is headed toward a recession. Some experts say we’re in a K-shaped economy, a term describing the divide between the rich and poor. A K-shaped economy can make lower-income Americans feel like they’re in a recession. Retired investment strategist James Paulsen believes the tech industry is boosting the country’s GDP, but otherwise, most of the U.S. is in a recession.
If you’re retired or nearing retirement, you might be nervous about a recession affecting your hard-earned savings. If the stock market plummets, you don’t want to lose money by selling shares for a loss. Here are five ways to protect your wealth ahead of a possible recession.
1. Check that you own dividend stocks
One way to earn money in the stock market is to buy shares of stocks and wait for their value to grow. Another way is to invest in dividend stocks. These may also gain value, but they also pay you cash, known as dividends, typically once per quarter.
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Dividend stocks are relatively low-risk, and the stocks’ values might not grow as quickly as others because the companies use their extra cash to pay investors rather than reinvest in their businesses. However, these safer stocks can be great for older investors who aren’t looking to take on a lot of risk.
These companies aren’t required to pay dividends if their businesses aren’t doing well. So, buying reliable dividend stocks that tend to perform well in all types of economic climates can make it more likely that you’ll receive dividend payments.
USA Today uses Coca-Cola (NYSE: KO) as an example. While Coca-Cola isn’t necessarily the best stock for every investor, it’s known as a strong dividend stock because it has been increasing its dividends for decades.
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2. Create a bond ladder
If you own bonds — or are interested in investing in them — building a “bond ladder” is a smart strategy for minimizing risk in retirement. Picture your bond as a ladder, and each maturity date is a rung.
Let’s say you have bonds with maturity dates of 2, 5, 8, and 10 years. When your first bond reaches maturity in two years, you reinvest that money into another 10-year bond to keep your “ladder” stable and moving upward.
The ladder approach provides you with a consistent source of revenue. If you buy all of your bonds around the same time, you risk locking in a super-low rate on all of these investments. But staggering your bond maturity dates provides you with interest rate diversity.
3. Keep enough cash in a high-yield account
If you tie up too much of your money in investments, you put yourself in a tricky spot if you need a large sum of cash later. You want to avoid being forced into selling something when the market is down.
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The amount you set aside is ultimately up to you, but consider keeping one to two years of necessary living expenses in some sort of savings account. Stashing it in a high-yield savings or money market account is another good way to earn interest on the money while it sits in the account, just like passively earning dividends with dividend stocks.
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4. Add Treasury inflation-protection securities (TIPS) to your portfolio
Inflation can be a driving factor of a recession. Your money doesn’t stretch as far when inflation increases, and some stock values will tumble. One way to protect yourself from inflation is to invest in Treasury inflation-protection securities, or TIPs.
TIPS are government bonds with variable interest rates that readjust every six months. They also pay interest on the new principal, and this compounding strategy helps your money grow. You can buy TIPS with a 5-year, 10-year, or 30-year term. These securities pay lower rates than corporate bonds, but they’re also less risky, which is ideal during a recession.
5. Receive regular payments through annuities
An annuity is a type of investment through an insurance company. It can help you increase your retirement fund or work as a guaranteed stream of income.
With an income annuity, you make an initial investment, then receive monthly, quarterly, or annual payments. A tax-deferred annuity allows your funds to grow in the account, and you won’t pay taxes until you take out the money.
You may consider investing in an income annuity to receive ongoing, regular payments. If you have a tax-deferred annuity, you might decide to receive payments or take withdrawals, each of which has its own tax implications. Annuities aren’t for everyone, but they’re worth considering, especially if you’re worried about income during a potential recession.
It’s crucial to speak with a financial adviser about these options for protecting your retirement fund. They’ll explain details you might not fully understand, including any insights about how the economy is doing overall.
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Laura Grace Tarpley is a contributing reporter for Moneywise who has been covering personal finance and working in digital media for 10 years. Her expertise spans banking, investing, retirement, loans, mortgages, and taxes.
