This Popular Retirement Income Strategy May Not Work Soon Enough

It's optimal for retirees to have multiple income streams to rely on, as opposed to a single source. Although a good number of seniors have only their Social Security benefits to live on, a better bet is to have a combination of those monthly benefits and savings at the very least. And the more income sources you have layered on top of that, the better.

For many seniors, part-time work serves as a means of boosting retirement income. And if you're newly retired with minimal savings, and living mostly on Social Security isn't workable, then you may be eager to supplement your income with earnings from a job.

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This is a strategy that's normally quite feasible. But it's one you might struggle with in the near term for one key reason.

Is the U.S. economy headed for a downturn?

Ever since tariff announcements in early April sent the stock market on a downward spiral, experts have been cautioning about the potential for a broad economic slowdown during the second half of 2025. And that's something workers and retirees alike should be mindful of.

Granted, we don't seem to be on the cusp of a recession just yet. In April, the U.S. economy added 177,000 jobs, beating experts' estimates. And the unemployment rate remains fairly low at 4.2%.

Still, once tariff policies really take hold, economic conditions have the potential to deteriorate. And that means a recession can't be written off.

Here's how that might tie into your retirement income. First, although it's not a given that a recession will send stock values tumbling, it could happen. Ideally, you're sitting on a balanced portfolio that's not too heavily concentrated in stocks. But now's a good time to check and make sure that's the case.

A recession could also lead to broad job loss. And that means the popular strategy of working to supplement your retirement income may not be available to you.

If you're holding down a part-time job, or plan to, you may have a tough time if economic conditions worsen. Employers may be quick to lay off part-time staff so that full-timers can stay on board.

The gig economy could also suffer during a recession. If money is tight, consumers may be less likely to spend it on rideshares, food delivery, or other gigs you may be pursuing for extra income.

How to prepare for a recession

It's not a given that there will be a recession this year. And even if there is, there's no saying how long it will last and to what extent it will affect your ability to hold down a job in retirement.

But it's important to plan for that possibility, just in case. And so one thing you may want to do, if possible, is increase your hours now and bank a little extra savings in case you're not able to work as much as you want to, or at all, later on in the year.

It's also a good time to assess your spending and see about cutting back. This is especially important if you hardly have any money saved and Social Security is your main income source.

Trimming some expenses could make it easier to absorb a hit to your income. It also affords you the opportunity to add to your savings in case you need to rely on those funds more heavily in the absence of being able to work.

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