Please ensure Javascript is enabled for purposes of website accessibility

Is Retiring in a Year From Now Still Possible?

By Maurie Backman - Apr 1, 2020 at 5:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Retiring right now is a shaky prospect -- but what about 12 months from now?

The COVID-19 crisis has sent the stock market on a wild ride, so much so that it plunged into bear market territory. More recently, we saw some recovery, but it's certainly too soon to declare that the bear market is over and a bull market is under way.

All of this volatility is enough to drive even the most seasoned investors crazy. But it can be especially tough on near-retirees, who may, at this very moment, find themselves wondering whether leaving the workforce in the near term is possible given what's going on.

Of course, anyone planning to retire in the next month or so would be wise to consider postponing that milestone to let the stock market make a full recovery. But is retiring in a year from now still on the table?

Older man types on laptop while older woman next to him holds document

IMAGE SOURCE: GETTY IMAGES.

Bear markets can be short-lived

Bear markets can easily last a year or longer, but that doesn't always happen. The shortest bear market on record for the S&P 500, for example, lasted less than three months back in 1990.

Whether the stock market recovers quickly or not from its COVID-19-related losses will likely hinge on the course the greater crisis takes and the extent to which the U.S. economy remains largely shut down. Investors who don't need their money for many years really shouldn't sweat the current situation – eventual recovery is likely based on the stock market's history, and anyone who avoids liquidating investments when they're down avoids losses.

Retirees, on the other hand, don't necessarily have the luxury to sit back and wait, nor do those who intend to leave their jobs very soon. If your portfolio is invested heavily in stocks, and you're hoping to leave the workforce in the very near future, cashing out some investments and locking in losses is a real possibility unless you have a large chunk of your savings in cash (which is a smart move when you're very close to retirement). As such, it might really pay to postpone retirement if your goal is to end your career anytime within the next few months.

Retiring in a year from now, on the other hand, may still be on the table. The stock market could very well recover fully by then, and even if it doesn't completely recoup its recent losses, if you have enough of your portfolio in cash, or enough of an income stream to avoid tapping your 401(k) or IRA early on in retirement (say, you can get by between Social Security and some money from a pension), you can protect your portfolio while also paying your living expenses.

As such, you don't need to write off the idea of retiring in about a year -- but don't get your heart set on it, either. Rather, be flexible. A lot can happen in a year's time when it comes to market movement, so if you're hoping to retire around 12 months from now, keep performing well at your job, maintaining your professional skills, and making smart financial choices. In other words, hope for the best, but also, prepare for the possibility that you may need to tweak your plans to protect your long-term financial interests.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.