When markets start to plunge, one of the biggest worries is what will happen to your hard-earned retirement savings. If your investments are not properly positioned, decades of retirement savings can be potentially wiped out during times of market volatility. Markets can go through cycles, but you don’t want to wait until you are already retired to protect yourself.

Whether you are already in retirement or planning to retire in a couple of years, here are some strategies to safeguard your lifelong savings against a possible recession.

Diversify your investments

The first step when assessing what to do in the face of possible recession is to diversify your investments as much as possible. Investors have many ways to do this, but the most important thing to remember is to not keep all of your investments in the same few assets.

You want a healthy mix of stocks and bonds to spread exposure to risk among different asset classes. During market downturns, for example, defensive stocks tend to do well or stay the course during volatile periods. If individual stocks are not your thing, you can move money into defensive ETFs, which invest in non-cyclical stocks that tend to do well during recessions.

These defensive areas include utilities, which are a necessity regardless of market conditions, health care and consumer staples, which includes items such as food, soap and diapers. Stocks of all kinds, however, are still vulnerable to market swings, so moving money into government securities such as Treasury bonds can add an extra layer of protection to your portfolio.

Use an annuity the right way

Annuities have gotten a bad rap over the years, but if used correctly, can provide both safety and returns during uncertain times in retirement. An annuity is a contract with an insurance company that provides payments over a certain period of time. Annuities can be tied to the market and have a fluctuating interest rate, or they can be fixed and pay you an (often low) guaranteed interest rate. Most annuities also offer a death benefit that can be paid out to your beneficiaries in the event you pass away.

Annuities often charge high fees, as the investor is paying the cost of life insurance (for the death benefit) on top of management fees for the invested portion of the account. However, certain annuities can safeguard against recessions and can be appropriate for investors who have the cash to fund them and those with longer investment time horizons.

Fixed annuities provide protection from market downturns, but at the cost of limiting potential gains. The best annuity for you depends on how much you can pay into the contract and how often.

Single-premium fixed annuity

Single-premium annuities are funded with one lump-sum premium, and sometimes the payouts start immediately or within a year. A fixed-rate annuity guarantees a fixed rate of return, and can safeguard against a recession by providing a guaranteed income regardless of what the market does.

Let’s say you choose the single-premium immediate annuity with a guaranteed rate of 4 percent. You’ll receive this rate regardless of what happens to the market.

Many people fund these accounts by rolling over an old 401(k) or IRA, which can be a smart move to get your money out of more market-sensitive accounts and into an investment vehicle that gives a guaranteed rate of return while still staying invested.

Deferred fixed annuity

Deferred fixed annuities are a safe option, and are often compared to CDs. Deferred fixed annuities are similar to single premium fixed annuities, as they guarantee a certain (albeit usually low) rate of return, but allow the investor to contribute to the account over a longer time horizon.

With a deferred annuity, the longer period of time – called the accumulation phase – can be a better option for those who do not have large sums of cash to deposit into an annuity, but rather want to safeguard their investments for the future by starting at a younger age.

Delay taking Social Security

Delaying Social Security, if possible, has certain advantages. Social Security benefits are increased by a certain percentage for each month you delay taking your benefits beyond full retirement age – age 67 for most people – until age 70, when distributions must begin.

Although over the course of a lifetime the amount of money you will receive will be more or less the same whether you take benefits early or later on, delaying the distribution phase allows for a larger monthly check when you do begin. And if you delay and live longer, you’ll end up maxing out your Social Security benefit.

By delaying your benefit you prevent yourself from spending the money earlier on, though you’ll need to use other resources or retirement accounts for expenses. Drawing on non-taxable accounts, like a Roth IRA for example, can help get you through a recession while keeping your Social Security safe until you absolutely need it.

Keep making money

One surefire way to safeguard against money loss is to keep making more of it. There are a number of ways retirees can keep generating income well beyond their retirement. Whether it is taking advantage of skills you spent decades fine-tuning or charging money to watch small children, side hustles for retirees can bring in extra cash to cover the potential losses brought by a recession.

Even if you are not of retirement age, generating a second stream of income now can set you up for financial success in the long run. Having a supplement to your main income or retirement benefits will help safeguard against market volatility and cyclical recessions.

Bottom line

Most of us will likely live through several recessions during our lifetimes, and especially during retirement, it is crucial that your portfolio is prepared. By diversifying your holdings and prioritizing income-generating investments or activities, you can position your hard-earned savings to weather any kind of market downturn.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.