How Rich Do You Feel Right Now?

The theme this week on the Retirement Quick Tips Podcast is: Why You Shouldn’t Retire in 2022

Roughly 2 million more people than expected have joined the ranks of the retired during the pandemic, according to The New School's Schwartz Center for Economic Policy Analysis.

2 million extra people are now retired compared to what would be expected since the pandemic began...that’s a lot of people who decided to accelerate their retirement and call it quits over the last couple of years, and that’s in addition to the roughly 2 million people who retire each year in the US.

The typical story behind an accelerated retirement goes something like this: I’m burned out at work, I had a health scare last year, I’m worried about Covid, I don’t want to get vaxxed but my employer is making me....these are all reasons I’ve heard in just the last few months of why some of my clients are retiring earlier than they planned. We run the numbers and find they can afford to retire now, so they put in their notice and call it quits.

And there’s nothing wrong with this. If you would rather be retired and not working anymore and you can afford to retire, great! But I think one of the problems facing early retirees right now, is that they are lulled into a false sense of security because they feel pretty rich right now. Their investment portfolios are fat and growing (at least they were until January of this year), and we really haven’t had a bad recession or a prolonged downturn in the stock market since 2008...that’s 13 years ago now. 13 years of steady growth and the last 3 years have been double digit earning years for most people. Covid counts as a bad recession, but it was over so quickly and recovered so soon that most didn’t feel any real pain. You’re in your peak earning years, likely with the highest income you’ve ever had. Your house is worth way more than it probably should be and so most people close to retirement feel pretty rich right now.

That’s a problem, because if your plans don’t take into account the possibility that we could have a recession and a major downturn in the market in your first couple years of retirement, you could be setting yourself up for a retirement that’s very different from the one you envisioned.

I’ll continue with this topic tomorrow and I’ll talk more about why you don’t want your retirement accounts to lull you into a false sense of security.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance