Retirement Planning in 2021: What It Looks Like

October 30, 2020

If you’re currently planning your retirement for 2021, you’re probably concerned about what that might look like. In the middle of a pandemic, there are some uncertainties in how the financial markets will perform in the short term. In short, this might not seem like the optimal time to retire. Even if you’ve been planning for a long time, the upheaval alone in the last year might unnerve you.

There are ways to safeguard your retirement during a recession. Anyone who has 2021 earmarked for retirement has been planning and saving already. And you should have been planning with the idea that the markets will move wildly. However, you may still want to wait to recoup any investments you may have lost or to grow accounts that aren’t as high as you’d hoped.

You might put off your retirement until things are more stable. However, that’s not your only option. Consider the fact that your retirement period might span decades. If you’ve already planned well for the ups and downs that can come during that timespan, retiring in 2021 might still be well within your grasp.

Finances and Retirement Planning Recession Tips

You’ve planned for your retirement. You’re ready to start the next journey of your life. If you’ve done your due diligence and have planned wisely, you can still launch as planned. You may also consider postponing for a bit just to make sure that your savings are solid enough for permanent retirement.

Here are some tips to help you make sure you’re retirement ready:

• Don’t Panic on Investments. It’s tempting to pull your money out of the market in a downturn, but that’s often the worst move you can make. The best advice is not to panic. Instead, look for wise investments during a downturn.
• Put Off Drawing Social Security. You don’t necessarily want to start drawing social security benefits as soon as you retire. The longer you can wait to draw from social security, the higher your monthly benefits will be. This can be a significant increase, so you want to research exactly what you’re entitled to and when the best age is to file for benefits.
• Plan for Your Healthcare Costs. This is a large expense that you need to consider. If you’re not ready to start Medicare, you will need to invest in a health insurance plan in the short term. You may still want to keep a private insurance plan as a supplement after you start Medicare. These are costs you need to add to your retirement budget, especially if your insurance costs were covered through your employment.
• Diversify Your Portfolio. In order to safeguard your investments, it makes sense to diversify the types of vehicles you use for your savings and assets.
• Understand Taxes. Before you retire, make sure you understand how to minimize your taxes during retirement. It’s also a good idea to hire a CPA who’s familiar with retirement planning to help choose your vehicles.

Retirement is something you’ve planned for and should be excited to begin. There’s no reason to put it off due to a recession, though you may want to be more frugal or creative to make sure that your retirement fund is enough.