How Long Should You Delay Your Retirement In Light Of The Coronavirus Pandemic?
Retirement is an most important phases of life. That’s because it is finally getting to call it a day, which makes it an important life decision. The recent COVID-19 pandemic has wreaked havoc in everyone’s life and has forced people to postpone or cancel any plan they had inked on the calendar.
According to a survey, around 68 million Americans have started reconsidering the time they have planned to retire. Since the pandemic is leaving them low on cash and their retirement funds taking a beating, they might be left with one question on the mind! How long should you delay your retirement in light of the coronavirus pandemic? Well, you might get the answer below.
Advantages of Postponing Retirement
Postponing retirement is probably not the only option to compensate for your diminishing savings. However, it is certainly among the best ways you can avail of three major benefits that can help you replenish your savings account. First and foremost, delaying retirement gives you more time so that you can have ample opportunities to get back on track.
Spending one more year at your workplace implies that you would have an additional year of contributions. Now that can be even thousands of dollars, of course, if you save carefully. In case you have planned to push your retirement off to another four to five years, it goes without saying that you will be piling up a five-figure sum for yourself throughout this particular time.
Other Benefits of Delaying Retirement
Aside from this, your retirement savings get considerable time to grow. This growth is significant, and you would be financially pretty stable if and when recession strikes. Nothing is more important than being financially secure in times of retirement. Moreover, the more time you spend working, the less time you have for your retirement period.
This will help you in cost-cutting during the retirement phase. It will not be an exaggeration, but you could save probably hundreds of thousands of dollars from your expenses in retirement. Also, delaying retirement leads to delaying Social Security as well.
When is the Right Time to Take Retirement Amidst COVID-19 Pandemic?
How long should you postpone your retirement is a decision that’s completely a personal one. It entirely depends on you. It depends on how financially strong you were before the coronavirus pandemic. Also, the portion of retirement funds you have spent, and the feelings you have regarding your monetary strength.
The best option to initiate the assessment is to rerun whatever retirement calculations you had made and start working backward. All you need to is to rewind. The first step is to jot down the current monetary value of whatever retirement plan you have.
In case you have more than one retirement account, make a note of all their balances. You can implement the same estimate that you have already used during the initial phases or make a cushion for yourself if the coronavirus pandemic has left you worried about the longevity of your savings.
What More Can You Do?
After you finish plugging these figures, in addition to your life expectancy and, of course, the retirement age that you have chosen for yourself into a retirement calculator, estimate your rate of return on your investments every year. Assume it on the lower side since you never know how long the recession will continue.
Your calculator will give you all the details regarding the amount you need to save every month from attaining the objective you have set for yourself. As soon as you finish these calculations, start saving in line with your new plan. However, remember to check from time to time where you stand, especially when you go through all the significant financial events in your life. You need to make sure that you are haven’t derailed from the path of a planned retirement.
Yes, it might be a bit complicated for you as there are many variables to consider while planning your retirement. And this pandemic is only adding to the list of variables that you need to deal with. For instance, due to the recession, you might experience a dip in your retirement savings fund. So, make sure you make an informed decision on your retirement!
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