For some of us, the coronavirus pandemic has complicated the question. As Yahoo! Finance reports, a Harris Poll study conducted this past summer found that 25% of Gen Xers and 14% of baby boomers think they will retire later than they planned, because of the pandemic's financial impact on their lives.
Will this perception be fleeting? Forty-nine percent of respondents cited the current state of the economy as the biggest obstacle to realizing their retirement goals, but the economy frequently changes course. Long-term retirement strategies consider potential short-term economic ups and downs.
If you are a retirement-minded baby boomer or Gen Xer, you might want to think about three factors. One, how did your investments perform in 2020. Two, the degree to which the pandemic is impacting your job security. If you feel you might be let go as a result of the pandemic's economic stress on your employer, then it may be time to begin creating a retirement transition strategy. Three, the timing of retiring in 2021. If spending the first year of your retirement in a global pandemic has you down, consider waiting until 2022 or later to wrap up your career could be a better choice.1
For Some, Retirement is a Plus
According to the University of Michigan's Health and Retirement Study, 18% of Americans aged 50-59 have never been parents. A notable percentage of affluent baby boomers are retiring childless and happy, and sometimes in a better financial position than their peers with families.
Retiring affluent and childless has a potential upside. A solo retiree or two-career couple may have amassed significant retirement savings or net worth, having had to devote less annual income to the expenses of raising a family. The potential downside? No children to share your life with. Before retirement arrives, childless couples and singles should consider creating a will and putting a durable medical power of attorney in place, perhaps allowing friends, siblings, or nephews or nieces to become part of the network of people who might help take care of them or make medical decisions on their behalf should the need arise. As they enjoy their retirements, they should also give some thought to the eventual destiny of their invested assets, their creative or intellectual property, and their legacies. Working on a meaningful legacy may contribute to a satisfying and meaningful retirement.2
On the Bright Side
Some large employers suspended matching contributions to retirement plans last year, but this was only temporary for many of them. Studying 260 such companies, consulting firm Towers Watson reports that 75% have already restored employer matches, with 74% matching at the same level they did before the arrival of the pandemic.3
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
1 - Yahoo Finance, December 4, 2020
2 - Next Avenue, December 9, 2020
3 - Market Watch, December 15, 2020