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  • Writer's picturePatricia A. Stewart | CFA

Weathering Economic Storms: Building a Recession-Resilient Retirement Plan

Canada’s population is growing at a record pace, with the number topping more than 40 million. With that growth comes a changing retirement demographic. Every day, roughly 10,000 baby boomers turn 65. By 2043, approximately 25% of all Canadians will be 65 years of age or older.

With millions of Canadians set to retire over the coming decades, many are not prepared for retirement. Among those Canadians who have not completely retired but are planning to, more than half (55.1%) say they will need to continue to work part-time.

And 55% of Canadians set to retire say they will need to change their lifestyle to avoid outliving their retirement savings. And that’s in a best-case scenario. That doesn’t account for outside factors such as economic downturns and unexpected volatility; events that can have a big, negative impact on retirement savings.

It’s important to protect your retirement savings from recessions and economic downturns because they are a certainty. Since 1970, the Canadian economy has experienced five recessions and 12 since 1929. During a recession, stocks experience a broad-based sell-off.

This is because people spend less, consumer confidence falls, and corporate earnings slide.

But there are steps Canadians can take to fortify their retirement plans against market volatility and ensure consistent growth.

What Are Some Strategies for Building a Resilient Retirement Portfolio?

While there’s no one-size-fits-all approach to retirement, conventional wisdom holds that you’ll need 70% to 80% of your current salary to support a similar lifestyle in retirement.

Some retirees are highly dependent on old age security (OAS). But the maximum monthly payment for those 65 to 74 is $713.34. It climbs to $784.67 once you turn 75. That isn’t a lot to live on.

Ideally, Canadian retirees will rely on their savings and investments to help them live a fulfilling, retirement.

Diversify Investments

In the face of a recession or economic downturn, it’s imperative that you diversify your investments. For example, during market downturns, defensive stocks tend to do well and rebound quickly when the economy does recover.

Defensive stocks include those companies that provide products or services that are necessary regardless of how the economy is performing. This can include utilities, healthcare, and consumer staples.

It might be tempting to want to sell your stocks if we’re in a recession and the markets tumble, but history shows it’s better to stick it out since the markets always bounce back. And if you overreact, you risk losing any gains your portfolio may have made and could make.

Keep in mind that the average recession lasts just three to nine months, which is pretty short in the grand scheme of your overall investing plan. Moreover, the broader markets bottom and make some of their biggest moves when the economy is still deteriorating.


You might want to consider bonds if you’re looking for additional stability in your retirement portfolio. Marketed as a low-risk retirement diversifier, bonds provide income and capital gains through exposure to a wide array of fixed-income markets, sectors, and issuers.

Government bonds are backed by the federal government and are among some of the most secure investments. This means you can rely on the underlying safety, principle, and interest.

The bond market’s success is tied to the overall economy and has an inverse relationship with interest rates. When rates rise, bond prices generally fall. But returns from maturing bonds can be reinvested into new bonds with higher yields.

Bonds also tend to outperform the stock market during a recession.

Real Estate

Over the long term, Canadian real estate has been some of the most resilient in the world. While Canadian real estate can be pricey, people will always need somewhere to live and work. An investment property can provide regular income. And, when you’re ready to sell, any appreciation can help supplement your retirement income.

Alternative Investments

Stocks, bonds, and real estate make up the bulk of most people’s retirement portfolios, but alternative assets are a great way to grow your money too. Well-known investors such as Bill Gates and Jeff Bezos invest in farmland, private equity, commodities (oil, gas, precious metals), and collectibles (fine art, stamps, coins, rare wines, etc.)

Sharp Asset Management – Helping You Reach Your Financial Goals

The reality is that you’re going to experience several recessions during your lifetime. If you’re planning for retirement, it’s imperative that you build a recession-resilient retirement plan that can weather any market downturn. The certified wealth management professionals at Sharp Asset Management can help.

Sharp Asset Management is an asset management firm that is 100% owner-operated. Our retirement planning professionals are not affiliated with any financial institution, securities firm, or mutual fund company, and our investment decisions are unbiased.

To learn more about how Sharp Asset Management can help you with your retirement planning, contact us today.

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