Should I Hit the Brakes on Retirement?
Market volatility and high inflation can bring retirement dreams to a screeching halt. Approaching Life 2.0 with a dwindling portfolio balance places you at a financial intersection — either postpone retirement or take the exit as planned. While remaining employed might not be ideal, delaying retirement could help ease financial concerns.
Before changing lanes, consider how making a move could affect your financial future — and your well-being.
Benefits of Delaying Retirement
Pumping the breaks on retirement plans can leave you disappointed. However, this option has several advantages, including:
- More savings with less effort. By waiting a few more years to withdraw funds from your retirement accounts, you give balances more time to compound and earn even more interest.
- Maximum government benefits. The longer you wait to claim Social Security benefits, the larger the monthly check will be. Waiting until age 70 lets you claim the maximum benefit.
- More time to eliminate lingering debt. Dragging debt payments into retirement could be costly since you’ll be using retirement savings to pay off old purchases instead of funding your retirement lifestyle.
- Lower out-of-pocket medical expenses. When you exit the workforce, you typically leave behind health care coverage provided by an employer. Delay the departure and you might need to use less of your retirement savings for medical care costs.
While there are sound financial reasons to stay employed until markets become more stable, sticking with your original retirement plan also has advantages.
Benefits of Retiring Now
While taking the exit ramp toward retirement seems scary, you’ll have more time to enjoy the lifestyle you’ve worked years to experience. Depending on your current age, retiring now could help you avoid:
- Required minimum distribution penalties. If you fail to withdraw the minimum annual amount from your retirement plan by a specific age, you could pay a stiff fee. NOTE: The IRS might waive the penalty under certain circumstances. Be sure to consult your tax advisor if you have questions.
- Continued workplace stress. If you give notice now, you could say goodbye to unreasonable deadlines or long work hours. The emotional relief of leaving such an environment could improve your overall health and happiness.
- Regret. Time is an asset you can’t buy — no matter how large your portfolio. If you retire now, you could have more time to spend with loved ones. Plus, retiring sooner may let you enjoy freedoms that might later be diminished by physical and mental decline.
Whether you decide to retire this year or in 10 years, developing an investment withdrawal strategy is vital to maximizing the dollars in your accounts.
When it comes to retirement, planning makes all the difference. Questions about managing your retirement portfolio? You can always reach out to MEMBERS® Financial Services with representatives at SAFE's branch offices. Schedule a free, no-obligation appointment today!