Many people spend decades saving and planning for their eventual workforce exit. But if you've just reached your target retirement age, you may be wondering if it's smart to go through with your plans to close out your career given the state of the stock market.
As of this writing, the S&P 500 index is down roughly 24% year to date. And current market conditions may have you questioning your retirement plans.
Now on the one hand, waiting to retire could make a lot of sense given how turbulent the market has been. But if you're really eager to end your career, you don't necessarily have to put off those plans because the stock market has been far from cooperative.
So what's the right call? Ask yourself these questions to find out.
1. How is my portfolio set up?
Older investors are often urged to start steering away from stocks as retirement nears and shifting over to assets that tend to be less volatile, like bonds. If you followed that advice, it may be the case that your portfolio is set up to withstand a market downturn like the one we're currently in the midst of.
Let's say stocks only comprise 50% of your portfolio, with the rest of your assets being allocated to bonds and cash. You may be in a position where you're able to leave the stock portion of your portfolio alone until the market recovers.
In fact, you may have enough non-stock assets to keep that half of your portfolio untapped for many years. If that's the case, moving forward with retirement isn't at all unreasonable.
2. What other income sources do I have available?
There's a good chance you'll rely heavily on your investment portfolio once you retire. But you may have enough outside income at your disposal to leave your portfolio untouched entirely until the market regains the value its lost this year.
Let's imagine you earned a decent salary throughout your career, and as such, are entitled to a pretty generous monthly benefit from Social Security. Let's also assume your retirement plans include working in your adult child's bustling cafe twice a week and earning a little extra income there.
All told, you may be in a position where you have enough money to live on that you can leave your portfolio alone for a good number of years without having to stress or pinch pennies. In that scenario, postponing retirement isn't necessarily something you should feel compelled to do.
Don't assume the worst
It's easy to see why the state of the stock market could be tempting you to rethink your retirement plans. But before you resign yourself to the extended career you don't want, think about whether you can make today's circumstances work. You may find that if your portfolio is set up in a savvy, age-appropriate manner, and if you have enough outside income coming your way, you can retire in the very near future without sentencing yourself to years of financial upheaval.