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With everything going so well, maybe it’s time for a stress test for your money. The time for a stress test is when things are running smoothly. Every big bank undergoes an annual stress test by federal regulators, even though they are not expected to fail. When you reach a certain age, your cardiologist might prescribe a stress test — just to make sure you have no hidden symptoms that could cause a heart attack.

Now, as we look around at the economy, personal financial issues seem relatively calm. The stock market continues to bump up against all-time highs, unemployment remains low (despite fears that AI will take jobs), corporate profits are soaring, and personal bankruptcies are rising only moderately at 8% annually.

In fact, despite geopolitical disruptions, domestic political challenges, rising gasoline prices and relatively high interest rates, there is very little public angst over the future of the economy. The baby boom generation is walking into retirement with record high 401(k) account balances and low mortgage balances.

Of course, many individuals are stretched thin financially, but general economic woes are not making the headlines on the evening news. And let’s hope it stays that way. But what if this is the calm before the storm? That possibility is certainly something to consider. And thus, you get the idea of the stress test.

Ask yourself “what if” on all your economic assumptions. The real question is “what if something goes wrong.” It’s not something most people want to think about.

It’s simply easier to assume that the laws of inertia about physical matter will carry over into our financial lives. You remember learning in high school science: “A thing in motion will tend to stay in motion, while a thing at rest will tend to stay at rest.”

Unfortunately, that’s not the case for your personal finances. And assuming that things will continue to go well, just because they have done so in the recent past, can put you at dangerous risk. It’s time for a risk check of your personal finances.

The obvious place to start is with your retirement funds. We’ve basically had a 45-year bull market, with a few interruptions. Even just buying the plain S&P 500 stock index fund, instead of hot tech stocks, has created a substantial amount of retirement assets. It’s tempting to divide that account balance by your life expectancy, and assume everything will work out fine.

Memories are short. The total return of the S&P 500 (including dividends) in 2023 was 26.29%. In 2024 it was 25.02%. In 2025 it was 17.88%. And so far in 2026, it is nearing 10%. No wonder your account balance is soaring. Long forgotten is the 18% loss on the index in 2022.

And taking a broader perspective, the average annual return of the S&P 500 stock index over the past 60 years has been 10.5%, including dividends. Since averages are made up of big gains and big losses, should you start wondering what’s ahead?

When it comes to stress testing, you aren’t worried about averages. Instead, you are worried about your own present situation and future needs. There have been four bear markets in those 60 years, each with a decline of nearly 50%. Long term investors survived all of them, and have the gains to prove it.

But your financial stress test needs to consider your own future needs as you move into retirement, the years you will be living on your accumulated investments. Can you survive a decline that lasts a few years, while you annually withdraw your living expenses? Or will stress take over, along with panic, urging you to sell at a loss?

Home values continue to rise, amid a shortage of new single family homes and the unwillingness of homeowners to give up their existing low-rate mortgages to buy a newer home. Ask yourself this: Has your homeowners insurance coverage kept up with the rising value of your home?

You may have replacement value for your furnishings, but have you documented (preferably on video) your home’s interior? Is it time to increase your coverage, but offset that higher cost with a higher deductible?

And is it time to consider an umbrella liability policy to increase your limits of personal liability, since your success has made you a target for potential litigation. That could cause a lot of stress!

If you’re carrying “manageable” debt (you can easily make the minimum monthly payment) then your debt doesn’t currently cause stress. But with the news that 20% of federal student loan borrowers are currently in default or “late stage delinquency,” it is apparent that 9 million borrowers are facing their own stress test.

And with a record $1.25 trillion in credit card debt — and uncounted billions in “buy now, pay later” debt outstanding — the potential stress of any economic slowdown cannot be underestimated.

Anticipating stress and acting in advance by cutting expenses and taking additional work is easier when the economy is doing relatively well. Similarly, evaluating your retirement income needs and risk-adjusting your investment portfolio, can alleviate future stress.

That’s what a stress test is all about. And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2026 Terry Savage. Distributed by Tribune Content Agency, LLC.