Should you rethink your retirement date?
When would you like to retire? You may already have a certain age in mind, but it might be a good idea to view your retirement date as more of a moving target, since changes in your life can affect your thinking – and your financial strategy.
Here’s a timely example: Because of the COVID-19 pandemic and its effect on employment, 35% of Americans say they are now planning to retire later, according to an Edward Jones/Age Wave study titled Four Pillars of the New Retirement: What a Difference a Year Makes.
Any number of smaller-scale events could also affect your retirement date. For example, if you get a new, higher-paying job, you should be able to increase the amount of money you put away for retirement – which, in turn, could allow you to retire earlier than you had once planned. On the other hand, if you lose a job and you’re out of work for a while, you may be forced to delay your retirement.
Your retirement lifestyle goals could change, too, where you might discover that you could make a reasonable amount of money as a consultant – and if that’s the case, why shouldn’t you retire earlier than you’d anticipated?
Here’s the key point: By planning ahead, you can give yourself the flexibility to respond to whatever changes come your way. Consider these suggestions:
- Take full advantage of your retirement accounts. While you’re still working, try to put in as much as you can afford to your 401(k) or other employer-sponsored retirement plan, and increase your contributions when your salary goes up.
- Keep your debts low. If you retire sooner than you had planned, voluntarily or not, you don’t want to be saddled with a heavy debt load. So, while you’re still working, try to follow a budget and oversee your cash flow in a way that allows you to avoid incurring heavy debts.
- Review your financial strategy. Review your strategy periodically, possibly with the help of a financial advisor, to make sure it’s still appropriate for your goals. Deciding to retire earlier or later will certainly affect this strategy, but so will other factors, such as your children’s education goals, your life partner’s income, your tax situation and your estate plans.
Preparation and flexibility: They’re two keys to helping you successfully reach your retirement date – whenever it occurs.
This article was written by Edward Jones for use by Joe Parlavecchio, CFA, CFP®. Visit https://www.edwardjones.com/joseph-parlavecchio for more information.