3 Ways Recession Fears Are Changing ‘Terrified’ Savers’ Behavior

Today’s investors are frightened — and that anxiety is causing them to change their investing behavior.

A startling 51% of investors who are not retired say they are “terrified” about their financial future, including the years of retirement, according to Nationwide Retirement Institute’s eighth annual Advisor Authority survey.

Men are somewhat more likely than women to report being nervous about finances in their post-retirement years — 45% to 38%.

However, women (37%) are nearly twice as likely as men (19%) to report that their expectations about retirement will shift significantly if the U.S. enters a deep recession.

As deep fear grabs hold of investors, they are changing some key behaviors. Following are three ways in which recession fears are impacting their actions, according to the survey.

Rethinking their retirement date

Women who are doing this: 38%

Men who are doing this: 26%

Of the three behaviors today’s scared investors report, this one is the most likely to be productive.

Perhaps the recent bear market has left you significantly poorer than you were a year or two ago. Or maybe high inflation — and fears of an impending recession — have you rethinking the wisdom of trying to live without a steady paycheck.

Whatever is driving your fears, thinking more deeply about when to retire is probably warranted. This is not a decision to take lightly even in the best of times so a re-examination of your plans is prudent.

Before you choose a date to begin your golden years, read “Want a Happy Retirement? Do These 3 Things First.”

Checking their retirement accounts more often

Women who are doing this: 53%

Men who are doing this: 34%

Many scared investors are checking their retirement accounts more than three times a week. That is not good news, as research has found that the more you check an account, the more likely you are to engage in counterproductive and risky behavior.

In a summary of Nationwide’s findings, Eric Henderson, president of Nationwide Annuity, says:

“As the holiday season approaches, it may be best to take a break from obsessively checking retirement balances. This can create self-induced anxiety which can lead to short-sighted, emotional decisions.”

Adjusting their retirement portfolios

Women who are doing this: 35%

Men who are doing this: 26%

Adjusting your portfolio in the face of market volatility might make sense, but only if you do so for the right reason.

For example, if today’s sinking stock market has revealed that your risk tolerance is lower than you previously had thought, changing your investment mix might be wise.

However, if you are acting simply to avoid losing money — in other words, if you are trying to time the market — you are likely making a mistake that will lead to poorer long-term performance.

Most investors are better served by leaving their investments alone, hunkering down and waiting for bad times to get better. As the late, legendary investor John Bogle — founder of Vanguard Investments — once said:

“These times of crisis, these times that try investors’ souls, are terrible times to make decisions. If you really have to make a decision, just to keep your own sanity, make it a small and incremental one”

How you can prepare for a recession

Do fears of a recession have you ruminating about your investments? The best way to calm such worries is to better educate yourself about the entire process of saving and investing.

To get a great start, check out the Money Talks News course Money Made Simple.

MTN founder Stacy Johnson offers 14 weeks of lessons on money basics in this course. You will learn how to improve your financial life in all the following areas:

• Budgeting
• Banking
• Credit
• Taxes
• Insurance
• Investing
• Real estate
• Estate planning

After finishing these lessons, you will be ready to manage money more efficiently while spending less time getting the results you want. As Stacy writes:

“Whatever your situation, understanding and learning to control your money is going to improve your life. If you’re rich, you want to stay that way. If you’re not, you want to get that way.”