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3 Signs You're Ready to Retire Despite the Recession

By Maurie Backman – Sep 3, 2020 at 7:02AM

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Retiring in the very near future may seem like a bad idea, but it could actually work out well for you -- as long as you're truly prepared.

Although the stock market seems to say otherwise, the U.S. economy is stuck in a recession. Given that fact, you may be worried about your impending retirement plans. If you're not sure whether you're in a good position for retirement right now, here are a few clues that you're pretty safe to move forward.

1. You've saved 10 times your salary or more

Though there's no single savings target that guarantees you'll have enough money in retirement, as a general rule, it's smart to retire with 10 times your salary in a 401(k) or IRA. If you're currently earning $80,000 a year and intend to retire in a few months, that means you should be looking at roughly $800,000 in savings, and if you're there already, you're in good shape. But if you're nowhere close, you may need to postpone that milestone a number of years.

Older couple using a calculator while looking at a laptop.

Image source: Getty Images.

2. You have a plan for claiming Social Security

While your Social Security benefits are calculated based on your earnings during your 35 most profitable years in the workforce, you can actually impact how high -- or low -- your monthly retirement benefit is based on the age at which you file. The full monthly benefit you're entitled to based on your wage history can be yours at full retirement age, which is 66, 67, or somewhere in between those two ages, depending on when you were born. You can also file for Social Security beginning at age 62 in exchange for a lower benefit, or boost your benefit by delaying your filing beyond full retirement age all the way up until age 70.

There's no right or wrong answer when it comes to claiming Social Security. Filing early could make sense, or you may be better off waiting. The key, however, is to make sure you understand the consequences of filing at different ages and plan accordingly.

3. Your investments are appropriate for your age

If you're at a point where you're ready to pull the trigger on retirement, having 90% of your assets in stocks generally isn't a wise idea. Once you retire, you may need to liquidate investments to pay your bills, so you'll want to make sure your portfolio is allocated appropriately given your age.

In your 60s, that generally means having a fairly equal mix of stocks and bonds. Of course, there's wiggle room in that formula, but the key is not to invest too aggressively, especially at a time like this. If the stock market tanks again like it did earlier in the year, it could destroy your near-term retirement plans. On the other hand, if you have a well-allocated portfolio, you should feel good about moving forward with your decision to leave the workforce.

Retiring in the midst of a recession is no easy feat. But if you've planned well for that milestone, the state of the economy shouldn't necessarily hold you back. As long as you have a healthy level of savings, a Social Security plan, and an age-appropriate investment portfolio, you can approach this next stage of your life with confidence.

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