If you’ve been following recent headlines, you’ll know that the global economy is facing growing uncertainty. In early 2025, the Bank of England reduced its UK growth forecast for the year from 1.5% to just 0.75%, according to the BBC. Meanwhile, the Guardian reveals that the US Gross Domestic Product (GDP) shrank by 0.3% in the first quarter of 2025, partly due to uncertainty surrounding Donald Trump’s questionable economic policy. GDP – which reflects a nation’s total economic output – remains a key measure of financial health. It indicates how much a country produces and whether its economy is growing or contracting, and can significantly affect how you protect your retirement savings.
Two back-to-back quarters of falling GDP typically mark the official start of a recession—a period when incomes may decline, job opportunities become scarcer, and, importantly for those nearing retirement, financial markets can become increasingly volatile. It’s a risk that many major financial institutions are taking seriously. Indeed, the International Monetary Fund (IMF) recently increased the probability of a global recession from 17% to 30%, while JP Morgan has placed chances even higher at 60%.
Regardless of whether a full-scale recession takes hold, now could be a smart time to assess how financially prepared you are. If retirement is on the horizon, the current climate may feel particularly unpredictable, but there are practical steps you can take to strengthen your plans. Read on to explore four key ways to protect your retirement savings.
1. 1. Review Your Financial Position
With economic uncertainty already taking shape, now is a sensible time to take stock of your finances. Even if you’ve already mapped out your retirement, your plan should adapt as your circumstances and external conditions like a recession, change.
Start by taking a close look at your monthly outgoings. You might spot areas where you can trim unnecessary spending, which could help you build some breathing room in your budget.
Small cutbacks can quickly add up, creating a buffer to support you through periods of financial strain. It’s also worth looking at any unsecured debts you may have. High-interest borrowing, such as credit cards or overdrafts, can become costly fast, especially during downturns. Paying down this type of debt where possible, could ease financial pressure and help you stay more resilient as the economy shifts.
2. Review the investments in your pension
In times of economic uncertainty, financial markets often react sharply, which means the value of your pension investments may fluctuate more than usual. Although seeing your pension balance rise and fall can be unnerving, it’s important to stay focused on your long-term goals rather than reacting emotionally. That said, reviewing your pension setup now could provide reassurance and help you make informed decisions.
A key area to consider is diversification. If your pension is invested across a mix of asset types, sectors, and global regions, it may be better positioned to weather market dips in any one area. Diversification helps reduce your exposure to concentrated risk, something that becomes particularly valuable during a recession.
It’s also sensible to reassess your current risk profile. As you get closer to retirement, you might choose to gradually reduce exposure to more volatile investments. Alternatively, ensure your current allocation still aligns with your risk tolerance and the time frame you expect to begin drawing income.
3. Maintain a financial safety net in retirement
Having a financial buffer is always sensible, but it becomes especially important during a recession.
An emergency fund can help you cover unexpected expenses without dipping into savings earmarked for other goals. As a rule of thumb, it’s a good idea to keep three to six months’ worth of essential household costs in an easy-access savings account.
If you’re already retired, you might want to go further. Setting aside one to two years’ worth of core expenses could provide extra peace of mind and help you avoid selling investments when the markets are down.
This approach can also reduce the risk of draining your savings too quickly and help protect against sequence risk—the danger that withdrawing funds during a market dip early in retirement could harm your long-term returns.
You may also want to think about protection policies. For example, critical illness cover pays out a tax-free lump sum if you’re diagnosed with a serious condition listed in your policy. This could support your recovery and ease financial strain, without putting pressure on your retirement savings at a time when markets are already unsettled.
4. Book a meeting to review your retirement plan
It’s completely natural to feel uneasy when news of slowing economies and falling markets dominates the headlines. Even hearing the word “recession” can trigger concern—especially if you’re approaching retirement.
But staying focused on the bigger picture is essential, and speaking with a professional can give you the clarity and direction you need.
Meeting with a financial planner offers a valuable opportunity to review your current approach and explore how well your retirement strategy is positioned to handle economic uncertainty.
They can help you identify any changes worth considering—whether it’s rebalancing investments, adjusting your budget, or reinforcing your emergency fund—to help protect your retirement savings in the years ahead.
With a clearer view of your finances, you’ll feel more confident making decisions, even in uncertain times.
Please get in touch with us today if you’d like some support.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
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