Should you rethink your retirement date?
When do you want to retire? You might already have a certain age in mind, but it might be a good idea to view your retirement date as a moving target, as changes in your life can affect the way you think – and your financial strategy.
Here’s a timely example: Due to the COVID-19 pandemic and its effects on jobs, 35% of Americans say they now plan to retire later, according to an Edward Jones / Age Wave study titled Four Pillars of the New Retirement: What a Year Makes the Difference. The same study found that over 60% of retirees would have liked to better plan the financial aspects of retirement.
Of course, the pandemic is (hopefully) a one-time event, but there are a number of smaller-scale events that could affect your retirement date as well. For example, if you get a new, higher paying job, you should be able to increase the amount of money you set aside for retirement, which, in turn, could allow you to retire earlier than expected. On the other hand, if you lose a job and are unemployed for a period of time, you may have to delay your retirement.
Your retirement lifestyle goals may also change. Instead of saying ‘goodbye’ to all forms of work, as you once thought you would, you might find that you could earn a reasonable amount of money as a consultant – and if so, why shouldn’t you retire earlier than you planned?
Here’s the key point: By planning ahead, you can give yourself the flexibility to respond to any changes that come your way.
What are some of these movements? Consider these suggestions:
- Make the most of your retirement accounts. While you’re still working, try to put as much as possible into your 401 (k) or other employer-sponsored pension plan, and increase your contributions as your pay goes up. In these accounts, spend a reasonable amount of your dollars on growth-oriented investments. If you decide to retire earlier than you thought, you may need to shift your risk level somewhat by investing more prudently in the last few years before your new retirement date, but most of the time , you contribute to a 401 (k), you really want to strive to grow as much as possible, within your tolerance for risk.
- Keep your debts low. If you are retiring sooner than you planned, whether on purpose or not, you don’t want to be faced with heavy debt. So while you are still working, try to keep a budget and monitor your cash flow so that you don’t get into heavy debt.
- Review your financial strategy. Consistently contributing to your 401 (k) and managing your debt are important parts of your overall financial strategy, but you’ll want to review this strategy periodically, possibly with the help of a financial advisor, to make sure it’s still appropriate. for your purposes. Deciding to retire sooner or later will certainly affect this strategy, but other factors as well, such as your children’s educational goals, your life partner’s income, your tax situation and your plans. inheritance.
Preparation and flexibility: These are two keys to helping you successfully reach your retirement date – when it happens.
This article was written by Edward Jones for your local Edward Jones financial advisor.
Edward Jones, SIPC member
Biography of local resident John-Paul:
Hello, my name is John-Paul Tancona and I am a financial advisor at Edward Jones. I have over 19 years of experience in this industry, working with both institutional and retail investors.
John Paul I graduated from Villanova University in 2000 and immediately began my years journey in the world of finance. My first 13 years were spent working in leading wealth management companies covering large institutional investors. Recently, I joined Edward Jones and changed direction to educate and empower individual investors so that they can achieve all of their financial goals.
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