3 reasons you shouldn't plan to retire in 2021

3 reasons you shouldn't plan to retire in 2021

10/13/2020

Retirement planning amid coronavirus crisis

Barron’s senior writer Reshma Kapadia and Barron’s Roundtable discuss how coronavirus upended some people’s retirement plans and what can be done to make up for that lost capital.

If you're tired of all of the devastation 2020 has bestowed upon us and want to look forward to a much better 2021, then you may be thinking of retiring next year. That way, you'll get to enjoy the freedom of having your days to yourself, and you won't have to punch a clock or deal with the stress of holding down a job. But while retiring in 2021 may seem like a good idea, here are three reasons to reconsider.

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1. The coronavirus pandemic is still raging

Unfortunately, the coronavirus outbreak is far from over, and as we head into the winter months, health experts fear it could get worse. What that means is that if you retire next year, you might spend the first six months of your so-called "freedom period" locked in your home, unable to travel or do the things you've been looking forward to in the course of your retirement planning. If that's the case, then it could pay for you to keep working, especially if you're able to do so safely, like in a remote setting or in an office that's taking major precautions, like imposing mask-wearing and social distancing. That way, you can earn some extra money and then really let loose the following year, when there's a greater chance of things getting back to normal.

2. The stock market could grow volatile following the November election

While it's hard to predict how the upcoming election will impact the stock market, November could wind up being a pretty wild month. And if the coronavirus pandemic worsens, stock values could drop dramatically to close out 2020. That's another reason to hold off on leaving the workforce next year. If your retirement plan value sinks in the next few months, taking withdrawals while your investments are down could put you in a position where you deplete your savings prematurely. You may want to sit tight and wait for a less turbulent period to pull the trigger on retirement.

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3. You may want a last hurrah on the job front

Many people were forced into remote work arrangements this year. If that's the case, but you previously enjoyed going into the office, collaborating with your team, and socializing with your colleagues, then you may want the opportunity to enjoy that experience for a number of months before calling it quits on a permanent basis. If a coronavirus vaccine is made widely available by mid-2021, you may get a chance to enjoy office life for half a year or so before retiring in 2022, and that may be a more fitting way to bring your career to a close.

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Eager as you may be to retire in 2021, due to the above reasons, it could pay to hold off on making that move. Remember, postponing retirement gives you an opportunity to pad your nest egg, all the while leaving your existing savings alone. And that's a good thing regardless of whether there's a pandemic and election at play or not.

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