“Everyone has a plan until they get punched in the mouth.” - Mike Tyson
Recent surveys have indicated that many of us are rethinking our retirement plans because of COVID-19. In fact, one survey from the nonprofit group Life Happens suggests that a whopping 43% of Americans say they plan to postpone and continue working past their retirement date because of COVID-19.
While it’s impossible to make blanket statements or provide guidance that fits everyone, there are three important questions you need to ask yourself before delaying your retirement.
Three Important Questions
Before you decide to postpone your retirement, it’s important that you make an honest assessment of where you are and how you got there. Ask yourself:
- How is your health? Did you know that 4 out of 10 current retirees said they were forced to retire earlier than planned because of health issues? Of course, you don’t know what the future holds for you in terms of your health, but an honest assessment is a great investment in yourself.
- How is your asset allocation? More specifically, if you were expecting to retire in say 3 years, were you invested 100% in equities hoping for one or two “great” years from the stock market? Not reviewing your portfolio the closer you get to retirement is a common mistake that could have devastating consequences.
- Did you alter your financial plan because of COVID-19? In other words, did you change your investments because you were scared? Trying to time the market based on fleeting emotions is a dangerous game.
Sure, Delaying Might Make Sense…
One piece of good news is that, if you postpone your retirement and keep working, you can elect to delay collecting Social Security benefits, which will have a significant impact on your monthly benefits.
One piece of good news is that, if you postpone your retirement and keep working, you can elect to delay collecting Social Security benefits, which will have a significant impact on your monthly benefits. For example, you can increase your monthly Social Security benefits by 8% for each year you delay collecting after reaching your full retirement age. If that age is 66, you can increase your monthly benefit by 32% by delaying until age 70.
Mike Tyson as Financial Planner
No matter what your situation, it’s important to remember the words of Mike Tyson:
"Everybody has a plan until they get punched in the mouth." Think about that.
- You plan to work 10 more years and save as much as you can. What happens if you get sick next year? What if your spouse gets sick or you become the primary caregiver for a parent? What if you get downsized?
- You are counting on double-digit stock market returns for the next 10 years. What happens if equities have low, single-digit returns?
- You are expecting to sell your house for double what you paid for it when you retire and then have a sizeable cash balance to contribute to your retirement. What happens if there is a real estate slump precisely when you need to sell?
The reality is that planning for the future is really tough right now. There are so many variables that you need to consider and so many assumptions you need to make.
Your Popular One team can help you make sound financial planning decisions based on your risk tolerance and goals.
Don’t do it alone.