Surviving During Uncertain Times

These are challenging times. New information is coming out on a daily basis. There is a good chance that the way you run your personal life today is not the way you were running it when the new year started. We asked our writers to create articles that help you run your personal life while maintaining your social distancing. We will be adding new articles every week.

Here’s What to Do if You Think You Need to Postpone Retirement

A survey conducted by StreetWise Retirement Confidence Index reveals that 26% of respondents say they would postpone retirement due to the coronavirus and the economic conditions it has caused. That’s not surprising considering the current level of uncertainty surrounding the pandemic and the economy. But, is it the right move? Of course, as with any financial considerations, that depends largely on individual circumstances. If you are thinking about postponing retirement, you can take some specific steps now to make it work to your advantage.

Set Yourself up With Delayed Social Security Benefits

Many financial planners say postponing retirement can actually work out better for most people assuming they are able to remain in their jobs. First, it would allow you to earn delayed retirement credits towards your Social Security benefits. Each year you delay claiming Social Security beyond your full retirement age, your benefit amount grows by 8% until you turn 70. At age 70, you will have earned a benefit that’s 32% higher, and it’s locked in for the rest of your life. But you will have to notify the Social Security Administration of your intent to delay benefits.

Maintain Your Current Investment Strategy

Everyone watched in horror as their 401(k) accounts plunged in value during the steep market sell-off earlier this year. The good news is the market has rebounded to its pre-crisis levels, so, for pre-retirees who stayed in the market, they are no worse for the wear. The strategy going forward in a delayed retirement should be to maintain your current investment strategy with regular rebalancing to maintain your risk profile and asset allocation target.

Will the market sell off again? Most likely. But it always comes back. You never want to start withdrawing funds from your retirement account during a market sell-off. However, delaying retirement for four to five years is enough time for the market to go through one, maybe two more cycles. History has shown that, wherever the stock market is today, it will be higher in five years. If anything, you should take advantage of the delay by increasing your contributions to your retirement savings, maybe focusing on building a larger emergency fund.

Live Like a Retiree Now

In planning for a secure and comfortable retirement, you may have already considered downsizing and simplifying your lifestyle to stretch your retirement dollars. Why not start now? The effect this has financially is obvious – more funds available to save towards retirement. The psychological impact is even more profound in that it prepares them for a smooth, seamless transition into their next stage of life.

Prepare for Your Second Act Now

You may have already considered working part-time in retirement – maybe as a freelancer, monetizing a hobby, or a second career. Now would be the time to set those plans in motion because your current employment situation could change between now and your delayed retirement date. Having a fallback plan for delaying retirement would be important.