Your current financial calculus might be keeping you awake at night as your dream retirement seems to be slipping away. Spiral inflation and a whiplash stock Exchange are attention hogs, but it’s certainly possible to make a few moves now that can keep you on track for retirement.
Fewer people this year — 47%, down from 53% a year ago — said they felt confident they could retire comfortably, according to Schwab’s 2022 401(k) Participant Study. Retirement anxiety has also skyrocketed, with 13% of respondents saying they were not at all sure they could retire, up from 8% last year.
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About 25% of American adults say they will have to delay retirement, BMO Harris Bank quarterly report shows Real Financial Progress Index. Which ones feel the most impact? Young Americans. Almost two-thirds of 18-34 year olds said they plan to cut retirement account contributions
People who only have a few years ahead of them have much less time to stock Exchange to smooth out bumps. For some people, delay retirement may make more sense.
The reasons for delaying retirement are many, according to Eisner advisory group partner Timothy Speiss. People want to stay active and earn more, and the longer you delay, the more time you’ll have for investments to pay off. Don’t forget to consider your social security. Depending on how long you can delay the request, you could increase your monthly benefit from 124% to 132%.
A experienced advisor should reduce your portfolio risk as you approach retirement, says Priya Malani, co-founder and CEO of Stash Wealth. “That means a temporary downturn, no matter how small, should have little to no impact on your portfolio,” she says.
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Retirement planning in times of uncertainty
Before you resign yourself to working for a few more years, you might want to take stock and see if you can actually start a life without work. A combination of some or all of the following strategies can help regain some control over when you retire.
1. Be flexible about working hours
Your retirement years don’t have to be completely one or the other, says Carolyn McClanahan, Certified Financial Planner and founder of Life Planning Partners. “Your ‘human capital’ or ability to work is the most secure asset you can have,” McClanahan says.
Consider a few adjustments to your work schedule, such as reducing work time instead of stopping altogether. That way, you can take the time to make the transition “a good financial buffer, especially if the markets are doing poorly,” McClanahan says.
2. Make a new investment plan
Instead of panicking about market fluctuations, develop an investment plan. Let’s say the current stock market is wreak havoc with your nest egg. Now may be the time to be more conservative. “Consider a strategy focused on protecting your investments with a more conservative investment asset allocation,” says Speiss. Your focus should be on how to generate income to fund your spending needs.
Consult a professional adviser if you feel uncomfortable doing this yourself, but remember that there are many Online resources and places to learn how about investing.
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3. Calculate how much it costs to be you
If you don’t know how to calculate your monthly living costs, write down your expenses. Gather some old credit card statements for items that are easily overlooked, such as streaming services, cell phone plans, and subscriptions. Most people underestimating their monthly expenses of about $133.
Next, look at investments in retirement and other plans, and see how they match up with what you’ll need to spend over a time horizon. If that sounds too complex, Speiss recommends meeting with an investment advisor.
Malani suggests using a online calculator to test if your nest egg will last until 30 years of retirement.
4. A different retirement
“If you’re burnt out from your old job or don’t have the ability to taper down, take a job doing something to bring in some pocket money,” McClanahan says. Beyond money, which is often the primary factor people consider when considering employment, don’t forget the social stimulation and educational benefits of professional engagement.
Two McClanahan clients retrained after retirement. One got a realtor’s license. The other, a former veterinarian, used his children’s remaining 529 funds to become an electrician.
5. Check your emotions
Investing and emotions don’t mix.
“The problem with markets is that when they go down, they always go up,” Malani explains. It’s natural to panic when the markets are choppy, but stick to your investment strategy.
“Those who let their emotions take over might have sold their investments or even halted their contributions,” Malani says. “A few years later, those who stayed the course found themselves more than 200% off the bottom.”
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