Here are 6 strategies to recession-proof your finances at any age

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

Older Americans in their late 50s and beyond feel better prepared than younger generations to handle a looming recession, according to another report by MagnifyMoney. Yet, overall, 68% of U.S. adults don’t feel financially prepared for one at all, the survey found.

Here are some strategies to recession-proof your finances, at every age. 

The first step to securing your financial future is to create a plan for reaching 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 tentative, but be determined.

Build your emergency fund

Make sure you have enough cash reserves to pay for unexpected expenses, like a car repair or medical issue, 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 advisors say your emergency fund should cover three to six months of living expenses. However, in a recession you’ll likely want more cash on hand — if you lose your job, it could take up to a year to find a new one. 

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

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Strengthen your resume

If the economy falters, you want to ensure that your biggest asset, your income, remains as steady as possible. Consider your marketable and transferable skills that can help keep you employed even in turbulent times. 

Anoverwhelming majority of employers — 93% — say “soft skills” also play a critical role in hiring decisions, according to ZipRecruiter. It found top “soft skills” in job listings include communication, customer service, scheduling and time management. List these skills on your resume and LinkedIn profile. 

Technical abilities — or “hard skills” — are also important. Software development, data analysis, and digital marketing are among some of the “hard” skills most in demand on job websites. Learn or brush up on these skills. LinkedIn and other online platforms offer free classes.

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

Get proper insurance coverage

Having ample insurance is one of the best ways to protect your financial life in uncertain times. You should have an auto policy, renters or homeowners insurance as well as comprehensive health, disability and life insurance coverage. 

Check coverage on your homeowners’ policy to make sure it covers rebuilding, not just cover the current market value of the home. Home values may fall during a recession. Also consider buying an “umbrella” policy to increase your liability coverage. 

Don’t forget to protect your income, your greatest asset. Research shows you are more likely to become disabled than pass away during your working years. If your employer offers disability insurance, get as much as you can. If you’re self-employed, buy coverage on your own. It is worth it. 

In your 50s, you may finally start thinking about what life will be like when you stop working in your current position or field — and start a new chapter. Getting through the first “pages” may be a tough slog in a recession. Start preparing just in case.

Make ‘catch-up’ contributions once eligible

At age 50, you can make extra contributions to your retirement savings accounts. It may make sense to turbocharge your retirement accounts now if you already have an ample emergency fund.

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

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. Those 55 and older can contribute an extra $1,000 to a health savings account. 

The time has almost come for your retirement — or you may be enjoying it already. A recession could alter or postpone your plans for life after work.

Test-drive your financial plan

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

Protect your portfolio

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

Tax diversification is also important. Having a mix of retirement assets in tax-deferred, tax-free (traditional and Roth IRAs and 401(k) plans or workplace accounts)  as well as taxable accounts can be a wise strategy to have more flexibility as economic conditions change. 

However, no matter what the economic condition, you should not have money invested in the markets if it is money that you will need in the next five years. That should be the case whether the market is soaring or we are in a recession.

For more advice on how to manage your money — no matter your age — sign up for Money 101 — a free, 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.