Rubino & Liang Wealth Partners

Thinking You Should Delay Your Retirement Date? Consider This…

A landmark study released in August found that 39% of American workers, some 68 million in all, are changing the timing on when they plan to retire.

What are the reasons for making that decision and how should you address them if you are also thinking about changing your retirement date?




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Retirement Delayed

“Three-quarters of those who are rethinking their retirement timing are planning to postpone retirement, by over 3 years on average. Their reasons are financial, they’ve had:

  • to dip into their savings
  • their retirement funds have lost investment value
  • greater uncertainty about how much money they will receive/have in retirement.

…The majority of working adults were not on track with their retirement savings to begin with, and COVID-19 has thrown them even farther off course. They are feeling less confident now about how much they are saving for retirement (only 46% confident today compared to 58% prior to the pandemic), and 20 million Americans have stopped making regular retirement savings contributions during the pandemic.” – Ken Dychtwald and Bob Morison of Forbes Magazine

In this episode, we’re going to specifically address people who were initially within 10 years of their planned retirement date who are now in that scenario of “I am going to postpone my retirement for the next (3-5) years, so I can try to ‘catch up’ and feel more confident about how much they are saving for retirement.”

First, let’s get in to the reasons why a person might feel less confident about their retirement situation:

  • They don’t know their monthly needs in retirement
  • They are unsure if their retirement accounts will generate enough income to sustain their lifestyle wants in retirement
  • They are not sure what government benefits will be available (or how much) when they are in retirement (Social Security, Medicare, etc.)

Now let’s address those three things and how to overcome them:

Determining your monthly needs in retirement

  • Something we keep hammering home here at Rubino & Liang Wealth Partners – understand what your monthly budget needs are, and make sure to consider things like inflation, taxes, and sudden-expenses (new roof, dishwasher, or health change)
  • If you’re putting off retirement because you don’t THINK you’ll have enough in retirement, but haven’t done the leg work to determine that number, will you EVER feel confident about retirement?

Unsure if your retirement accounts will generate enough income to sustain your lifestyle wants in retirement

  • Having investing strategies with your retirement accounts that are inline with your risk tolerance AND what your monthly budget needs will be in retirement to live the lifestyle you planned for
    • addressing inflation
    • lower interest rates than in the past
    • a possible change in taxes
    • Volatility in the market
    • This may be a hard conversation for people if they DO have a history of underfunding their retirement accounts
    • If you HAVE been underfunding your retirement accounts, what changes in your behavior will help you contribute more if you are only delaying retirement and not addressing the larger retirement planning picture:

Unsure what government benefits will be available (or how much) when you are in retirement (Social Security, Medicare, etc.)

  • From an AARP article on 9/22/201: “The facts – As long as workers and employers pay payroll taxes, Social Security will not run out of money. It’s a pay-as-you-go system: Revenue coming in from FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) taxes largely cover the benefits going out.

    Social Security does face funding challenges. For decades it collected more than it paid out, building a surplus of $2.9 trillion by the end of 2019. But the system is starting to pay out more than it takes in, largely because the retiree population is growing faster than the working population, and living longer. Without changes in how Social Security is financed, the surplus is currently projected to run out in 2035.

    Even then, Social Security won’t be broke. It will still collect tax revenue and pay benefits. But it will only have enough to pay {a percentage} of scheduled benefits. To avoid that outcome, Congress would need to take steps to shore up Social Security’s finances, as it did in 1983, the last time the program nearly depleted its reserves. The steps then included raising the full retirement age, increasing the payroll tax rate and introducing an income tax on benefits.”

To bring it all together, if you are in the 10 year window of retirement, and think that you should work for an EXTRA 3-5 years because of other economic factors – it would be worth it to speak with a professional to do a number of things:

  • Get a granular look at your retirement situation to see WHERE YOU ACTUALLY ARE on your retirement planning journey (you might already be at the number you need to be, or maybe you just need a few tweaks to the performance of your current portfolio)
  • Create a step-by-step retirement plan to put you on the right path to a successful retirement (maybe you DO need to make some additional contributions, or a Roth conversion might be more efficient for portfolio, etc.)
  • Help you hold yourself accountable for making the changes needed to stay on the path to achieving success in retirement (kind of like a personal trainer/coach, but for your finances instead of your body)


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Thinking about your retirement situation?

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