How to Get Ready for a Recession with San Antonio Financial Planning

There’s an old saying: “It wasn’t raining when Noah built the ark.” The same applies to your financial future. It is crucial to prepare for a potential recession before it happens. In our current period of economic uncertainty, getting recession-ready with San Antonio financial planning can be a wise move on your part. 

You already know inflation and a recession can have a significant impact on your lifestyles, especially if you are nearing retirement The impact can vary based on a lot of factors, including the economy’s overall health, your financial situation, and the duration of the event. 

In this blog, we’ll discuss four ways you can prepare for a potential downturn in the economy:

  • Understanding the Impacts of a Recession
  • Five Financial Planning Strategies to Prepare for a Recession
  • Five Investment Strategies to Prepare for a Recession
  • The Role of a San Antonio CERTIFIED FINANCIAL PLANNER™

Read our Quick Guide on “Financial Planning in San Antonio.” 

Understanding the Impacts of a Recession

While there can be several types of impact during a recession, a few have more impact on you than others. Following are five of the more important ones, particularly if you are getting closer to retirement or are recently retired.

  • Reduction in Retirement Savings: This is one of the most significant impacts of a recession. During a recession, financial markets are generally more volatile, which can significantly decrease the value of your retirement savings accounts, for example, 401(k)s or IRAs that are invested in the securities markets.  No one wants to retire at the end of a down stock market and when their savings are reduced. For example, the S&P 500 (a proxy for the stock market) was down 48%  between 8/28/08 and 3/9/09. People with 60% of their assets in the stock and retiring on 3/31/09 lost almost 30% of their assets, which doesn’t count the impact of inflation and expenses.
  • Decreased Home Equity: Many people count on the equity in their home as a significant part of their retirement plan, whether they plan to downsize, take out a reverse mortgage, or use it as collateral. A recession can cause housing prices to fall, reducing home equity and impacting the ability to leverage this asset during early or late retirement.
  • Unemployment or Underemployment: Recessions often lead to job loss. For those nearing retirement, this could mean being forced to retire earlier than planned, leading to lower Social Security benefits and fewer years of retirement savings. 
  • Increased Health Insurance Costs: If a recession results in job loss or early retirement, this could also mean a loss of employer-sponsored health insurance. Those nearing retirement age but not yet eligible for Medicare may face high costs of private insurance or medical bills, which could drain their retirement savings.

How Financial Planning Can Help You Get Recession-Ready

While there is cause for concern about the impacts of a recession, there are proactive steps you can take today to be more recession-ready.  It’s important to note that everyone’s financial situation is unique, so it’s a good idea to speak with a financial planning professional who can provide personalized advice tailored to your specific circumstances.

Here are a few of the top financial planning strategies you can use today to prepare for possible economic headwinds in the future: 

  • An essential part of financial planning is establishing a cash reserve that acts like an emergency fund, ideally covering at least six months of living expenses. In the face of an economic downturn, however, it’s wise to build this fund up even more – perhaps even a year or two. This will provide a safety net if you face income reduction or job loss during the recession.
  • Try to pay off debts with higher interest rates, like credit cards or personal loans, as these will become even more burdensome during a recession. If your income declines for several reasons, servicing this type of debt can become a significant problem.
  • Your budget should be flexible enough to adjust to changing financial conditions. Review your current budget and look for areas where you can reduce expenses if necessary. This could involve cutting back on non-essential items, finding cheaper alternatives, or even downsizing your lifestyle (at least temporarily).
  • Diversify Your Income: Relying on a single source of income can leave you vulnerable if a recession leads to job loss. Diversify your income by exploring side gigs, freelance work, or other types of part-time employment. Another way to diversify your income stream is passive income from various alternative investments, such as income-producing real estate. The goal is to create multiple income streams so if one decreases or disappears, you still have others to fall back on.
  • During a recession, ideally, you want to avoid major unexpected costs. The right insurance coverage is crucial to protect you from such financial hits. This includes health insurance, disability income, car insurance, and homeowners insurance. 

Recession-Ready Your Investment Portfolios

Now that we’ve discussed some financial planning strategies to prepare for a possible recession, let’s discuss some investment strategies you can deploy to recession-ready your investment portfolio(s). 

  • Asset allocation is about spreading your investments across asset classes such as stocks, bonds, real estate, and cash equivalents. The optimal mix will depend on your risk tolerance and time horizon for needing income and assets. Stocks have historically provided higher returns over the long term but can be more volatile, while bonds are generally more stable but provide lower returns. Real estate can provide both income and potential appreciation. Cash or cash equivalents, like money market funds, can buffer against short-term market volatility.
  • Sector investing refers to the strategic allocation of investment capital to specific segments of the economy, also known as sectors, to capitalize on potentially higher returns or reduce current or future risks. During a recession, the importance of sector investing becomes particularly important. As economic conditions change, different sectors react based on the buying habits of their users. For instance, defensive or non-cyclical sectors such as utilities and consumer staples often prove resilient during downturns because they provide essential goods and services that remain in demand irrespective of the economic climate. 

    Conversely, cyclical sectors such as automobiles and upscale retail purchases are discretionary because the purchases can be deferred. These stocks may be good investments when they take off during a recovery. 

    Utilizing sector investing can provide diversification benefits, risk mitigation, and opportunities for improved returns in a recessionary environment.

Listen to our podcast on “Small Cap Stocks-Big Recession Performers”

  • Global Diversification: Investing in international markets can also provide another layer of diversification. Different economies might not move in the same direction at the same time. If the U.S. market is declining, markets in other countries may be more stable or even appreciating, which can help offset losses due to recession.
  • Alternative Investments: These are investments in assets other than stocks, bonds, and cash. This can include commodities like gold and silver, hedge funds, real estate, or private equity. These investments have the potential to perform well when traditional asset classes struggle, though they often carry higher risks or fees.
  • Regular Rebalancing: Some investments will do better than others over longer periods. This can shift your current to one that represents more risk. Regularly rebalancing your portfolio – to return to your original allocation is a risk management tactic that keeps risk exposure to a pre-determined amount. For example, you want 60% stocks and 40% bonds. 


A San Antonio CERTIFIED FINANCIAL PLANNER™ (CFP ®) can play an invaluable role in helping you prepare your finances for a recession. Here’s how they can assist: 

  • A CFP ® can help create a budget to increase your savings rate. Saving more can provide more financial security during a downturn.
  • If a recession impacts your investments, it may also affect your retirement plans. A CFP ® can guide you in adjusting these plans in response to a recession.
  • A CFP ® can review your insurance coverages to ensure you’re adequately protected against risks that could be catastrophic during a recession.
  • A CFP ® can recommend tax strategies to maximize your after-tax income and wealth.
  • Given their expertise, CFP ®s will be up-to-date with the market trends and could provide insights you might not know. They can guide you in making informed decisions during a recession.
  • Recessions can be stressful and cause people to make impulsive financial decisions. A financial planner can provide a more objective perspective, helping clients stay disciplined during volatile markets. 
  • A CFP ® can educate you on financial matters, empowering you to make more informed decisions affecting your resilience during a recession impacting you and your family.

The PAX Financial Group in San Antonio provides highly customized financial planning and investment management services to successful individuals and families.  We focus on safeguarding your assets with detailed risk management strategies tailored to your risk thresholds.  We customize every financial plan we develop, attuned to your unique requirements and financial circumstances. To learn more about how PAX can help you prepare for a possible recession, we invite you to connect with us

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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing (“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

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