There won’t be bread lines in Beverly Hills or soup kitchens in Scarsdale, but if the economy continues to struggle in 2023, people who are financially comfortable now might find themselves feeling decidedly less comfortable. Welcome to the “richcession.”

Historically, those who have the fewest assets and lowest incomes take the hardest hit during difficult economic times, but the current financial picture doesn’t look too bad for this group. Wages for relatively low earners have been climbing faster than inflation as service-sector employers compete to attract employees. This trend has shown little sign of abating. And retirees received a hefty 8.7% inflation adjustment to their Social Security benefits—which is meaningful for those who have minimal savings and depend on Social Security to pay the bills.

But salaries for many higher-earners have failed to keep pace with inflation, and the well-compensated tech sector is experiencing layoffs. Steep stock and bond market losses in 2022 mean that well-off retirees who live largely off their savings already might be feeling a financial pinch in 2023 despite that Social Security adjustment.

Protect yourself from the richcession…

Buy a fixed guaranteed annuity. The guaranteed income that annuities provide makes them a great hedge against the risk for continued stock and bond market volatility. Best: Select one that includes some inflation protection.

Roll back “lifestyle creep.” Spending tends to inch up as people grow wealthier. Identify and eliminate indulgences that don’t meaningfully improve your life.

Stop paying for services you could do yourself. The cost of labor continues to escalate even as inflation eases for goods and housing. Tackling lawn care, home maintenance and other tasks on your own could deliver significant savings.

Start an emergency fund. Having an emergency fund reduces the odds that less liquid investments will have to be sold at an inopportune time, and these days some money-market funds do offer yields around 4%. Helpful: The standard advice is to put the equivalent of three to six months of earned income into an emergency fund, but that doesn’t always make sense for high-earners and retirees. Instead, put away the equivalent of three to six months of necessary expenses.

Consider returning to the workforce part-time or as a consultant. Employers in many fields would happily rehire experienced former employees these days.

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