Any year you choose to retire is a great year. However, if you are retiring during an economic downturn characterized by negative investor sentiment, skyrocketing inflation and stock market declines, there are certainly several things to consider when retiring from work.
See: 10 jaw-dropping statistics on the state of retirement in America
To find: 5 things you need to do when your savings hit $50,000
At first glance, 2023 may seem like one of the worst years to retire, but as Forbes noted, the S&P 500 has risen about 50% over the past five years and, despite falling 17% since the beginning of the year, it has increased by 10%. % from the end of 2020.
Keep in mind that bear markets can seem like an eternity to investors, but they usually have a relatively short lifespan. Retiring in 2023 means you’ll likely start when this troubled market cycle ends and (hopefully) when the economy starts to rebound.
These may seem like small positives, but your retirement plans don’t really have to reflect the grim financial picture we’re seeing right now. Here’s a closer look at some things to seriously think about as you make 2023 the perfect year to retire.
Crunch the numbers
Accurately estimating your retirement expenses is an important part of retirement planning – and sitting down with a professional (or developing a solid personal financial management plan yourself) is key.
A thorough comparison of the total amount you have saved against your estimated retirement expenses will ensure you have enough money to cover all your bills. As you do, write down all your retirement account balances, including any IRAs or 401(k), any health usable savings accounts (HSAs), and any potential income streams, including potential inheritances.
Let go of inflation worries
That’s easier said than done, of course. Americans lived with record inflation for much of 2022 and there were only rare glimpses of relief in sight.
Older people have particular reasons to be concerned about inflation. They often rely on fixed incomes, which are eroded by inflation. Being out of the labor market, they generally care less about unemployment.
However, retirees are also arguably less affected by a rise in the consumer price index (CPI), according to at least one expert. As Forbes Advisor contributor Bob Sullivan said, generally speaking, without a large family to feed and a car to fuel up and drive every day, “retired Americans should be more worried about unemployment rates.” ‘local taxation or the rising cost of health care’.
“It’s really important not to let the emotional part of the inflation picture dictate real financial choices,” Sullivan added. While inflation is unlikely to stay at current levels of 7% to 8%, it is not certain that it will drop to 2% anytime soon either. If you plan your retirement budget properly, you won’t spend too much time worrying about the ups and downs of inflation.
Defer social security payments
Many older workers have health problems, have to care for a spouse or family member, or have been laid off and need to apply for social security as soon as possible. Sometimes that’s the only option.
Financial advisers often recommend that older savers stay on the job as long as possible so they can continue to earn their paychecks and delay the start of Social Security benefits. However, if you retire, you may need to draw on some saved income to pay for necessary expenses and your desired standard of living.
Doing this without tying yourself to lower monthly Social Security payments, especially when inflation is high, will put you on a stronger financial footing.
Forbes recommended researching your other sources of income first — like a 401(k) or Individual Retirement Account (IRA) — before taking any Social Security payments.
Consider working part-time
If you’ve decided to retire in 2023, the last thing you may want is to work. However, you’d be surprised how many recent retirees are missing work and how many plan to work part-time for pay shortly after retiring from full-time employment.
According to the 2022 Employee Benefits Research Institute (EBRI) Retirement Confidence Survey, 70% of workers surveyed plan to work in retirement, compared to just 27% of retirees who say they actually have worked for pay after retirement.
It’s important to boost your finances so you don’t deplete your savings or other income in retirement, but it’s equally important to stay busy and stay healthy. Part-time work can meet the physical, emotional and financial needs of some retirees.
In fact, the EBRI survey found that most people who worked in retirement did so because they wanted to stay active and involved (88%) and they liked working (78%). They are less likely (but still a substantial number) to do so to avoid reducing their savings (60%), because they need money to make ends meet (39%), for fear of a decline in the value of their savings or investments (25%) or retaining health insurance or other benefits (18%).
Enjoy the benefits while you still can
It should go without saying, but if you can take advantage of existing benefits before you retire, rule out any medical issues or visits to a practitioner now.
As Forbes noted, Fidelity estimates that $315,000 will be spent on health care expenses and additional costs and premiums by the average American couple during their retirement years. If you retire before you can enroll in Medicare, you will need to purchase health insurance (if your employer does not provide retiree health coverage).
Take our poll : Do you think you can retire at 65?
After: 8 purchases everyone nearing retirement should make
You owe it to yourself and you have the right to maximize all possible advantages while you still can. So schedule doctor’s appointments and procedures, fill prescriptions, get dental coverage covered, book eye tests and order corrective lenses. Now is the time to take your chiropractic and massage therapy credits as well.
More from GOBankingRates
This article originally appeared on GOBankingRates.com: 5 ways to feel safer retiring in 2023