Sooner or later, the economy will fall into a recession, because that’s the nature of the economy: Busts follow booms. For many retirees, the biggest challenge is the investment volatility that typically accompanies a recession. For those who haven’t retired yet, the biggest worry tends to be losing their job. If you know what to expect in a recession, however, you’ll know how to survive it. Let’s take a look at what recessions are and how to handle them.

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What’s a recession?
Most retirees have lived through several recessions and know that it’s not pleasant. Typically, you’ll see a recession described as “two consecutive quarters of negative economic growth.” In other words, gross domestic product (GDP), adjusted for inflation, has to fall for at least six months. But that’s not a terribly accurate description.
The official arbiter of recessions is the National Bureau of Economic Research (NBER), a private nonprofit made up of economic researchers. Its Business Cycle Dating Committee uses several different indicators to determine when a recession starts and ends. GDP is just one of those indicators. The committee also looks at employment trends, industrial production and retail sales, among other factors.
The NBER’s broad definition of a recession is that it is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” In practical terms, a recession is a period of increasing unemployment, business failures and general economic distress.
Since 1854, the U.S. has had 35 recessions, lasting an average of 17 months, according to NBER. Recessions have been fewer and shorter since 1945, lasting an average of 10.3 months. The recession of 1873 was the big daddy of misery: It lasted 65 months. Here's how long the last 10 recessions lasted:

What causes a recession?
A classic recession is caused by an overheated economy. Rising demand for goods roars past industry’s ability to produce them, and that, in turn, results in inflation. Low unemployment means that workers can command higher wages, which results in further economic overheating.
How does that turn into a recession? High consumer demand in a ripsnorting economy usually translates into higher interest rates. Rising rates means businesses have to spend more to borrow, which reduces corporate earnings. For retirees, higher mortgage rates means it’s harder to sell a house, and the rates on credit cards and auto loans become more expensive. If businesses and consumers feel the economy is slowing, they reduce spending, and eventually, the economy stops expanding, inflation cools and sometimes the economy falls into recession, as it did in 1981, for example.