The dramatic precipitous fall in the markets have shocked many. Are you looking at your now much smaller retirement accounts and wondering if retirement is even possible?
In early March, just as the market drop was getting underway, SimplyWise, a New York City-based retirement planning firm, conducted a study on coronavirus caused retirement delays. The study found:
- 44% of Americans would delay their retirement and continue working if the market dropped another 10%.
- 18% of Americans would work for at least 5 more years as a result of prolonged stock market woes.
“Given the market volatility since then, we believe there may be continued delays to people’s retirements as savings may no longer be enough to live on,” says Allie Fleder, COO & Head of Business Development at SimplyWise. “And of course, for those who can afford to wait, delaying claiming Social Security benefits can pay off with an 8% bonus every year you wait up to age 70.”
Making matters worse, you’re now stuck at home learning what it might be like depending solely on your own financial resources to live. “Being forced to stay at home will give people a taste of what it would be like to be home all the time and live off a fixed budget,” says Ken Van Leeuwen, Managing Director & Founder at Van Leeuwen & Company in Princeton, New Jersey. “The fixed budget may be a new concept to people who are used to receiving a paycheck.”
Finances aside, as you stay safe at home you may be finding there are other reasons to avoid retirement.
At the top of this list is the one thing you have in retirement that you don’t have when you’re working: total freedom. While this sounds attractive, with freedom comes responsibility. You not only get to decide what to do, but you must decide what to do. Every day.
Sometimes it’s a lot easier just to follow orders.
“The structure of a 9 to 5 job is a big part of your life,” says Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan. “You’ve likely been doing it for 20-40 years. It’s difficult to stop cold turkey.”
File this reason under “be careful what you wish for.” Sometimes too much of a good thing is not a good thing. “If you had envisioned a calm, stay-at-home retirement, you may realize it isn’t all you had hoped,” says Brandon Renfro, a financial planner at Brandon Renfro, PhD Retirement Planning and Wealth Management in Hallsville, Texas.
You may also discover another popular retirement reason—spending more time with your family—isn’t all it’s made out to be. “This has been an opportunity to test spousal interaction during retirement,” says Steve Parrish, co-director of the Retirement Income Center at The American College of Financial Services in Des Moines. “The lament ‘for better for worse; for richer, for poorer; but not for lunch’ is being experienced before retirement makes it permanent.”
Beyond family, there’s friends. Take an inventory of those you consider your closest friends. How many of them occupy a desk near you? “For those that are more ‘extroverts,’ especially those with a small social circle outside of work, they will realize that retirement can be lonely,” says Scott Bishop, Director of Financial Planning for STA Wealth in Houston.
That last popular reason may be called the “all the time in the world” promise. Yes, you’re free to choose what you want to do. Better still, you have all the time in the world to do whatever it is you want to do.
Does that sound good to you?
Caveat emptor. This blessing can turn into a curse.
“After a couple of weeks cooped-up at home,” says Duncan Rolph, Managing Partner at Miracle Mile Advisors in Los Angeles, “you’ll realize your job is way better than taking out the trash and walking the dog endlessly around the block.”
You’ve seen this, whether through classic movie stereotypes or your own first-hand experience. “The current quarantine replicates the ‘puttering around the house’ I have seen with my parents and others,” says Katharine Earhart, Partner & Co-Founder at Fairlight Advisors in San Francisco.
The coronavirus quarantine may open your eyes to the downside of retirement. It may convince you to avoid retirement, or at least delay it. “People are realizing how boring retirement can be if you don’t have something to fill your time,” says Taylor Kovar, CEO of Kovar Wealth Management in Lufkin, Texas.
“One client told me this gave them a glimpse of retirement life,” says Timothy Hooker, Investment Consultant with Dynamic Wealth Solutions LLC in Southfield, Michigan. “It made them never want to retire because of how bored they got staying at home for extended periods.”
Don’t fret, however. Treat your self-quarantine as an opportunity to kick the tires of retirement.
“There’s nothing like trying retirement on first to see whether it fits,” says Pam Krueger, CEO & Founder of Wealthramp, Tiburon, California. “Advisors routinely tell their pre-retired clients to picture themselves on a typical day in retirement to make sure they understand how different life will be. Some aspects of the quarantine are like a rehearsal for retirement—how does it fit?”
Be sure to look at the entire picture, not just how you’ll fill your time. You may have some dreams you have yet to achieve. Can you accomplish them in retirement?
“For some, time at home is a welcome rest, but the desires to work and stay busy are still priorities,” says Luke Burton, Client Services Associate at Narwhal Capital Management in Marietta, Georgia. “Folks might realize that they want to be more active than previously thought.”
Indeed, staying—and working—at home may reveal retirement opportunities you never considered. It may even cause you to redefine “retirement” that flips the definition on its head.
“Working from home lets me know I can keep working long past my ‘official’ retirement age, because frankly, with a PC and internet connection, I can continue to work from anywhere,” says Laura Handrick, a contributing HR Professional at Choosing Therapy in Brooklyn. “I plan to retire in 5-7 years from full-time work and plan to stop working… never. I can write, consult, teach, blog, host webinars and more, remotely. There’s no longer a need to ‘retire.’”
Where are you in this broad spectrum? What does that tell you about your (non-financial) retirement preparedness?
“You might be feeling restless and bored and have no idea what to do each day,” says Mike Lynch, Managing Director, Applied Insights Team at Hartford Funds in Wayne, Pennsylvania. “You might start to realize that you can’t wait to get back to the office, that you need to develop some new hobbies and that virtually connecting with friends isn’t enough. You probably feel like you need more time to plan out your retirement.”
Therein lies the good news. If you feel like your current quarantine experience makes you want to avoid retirement, take heart. It may tell you less about retirement in general and more about your readiness to retire.
In other words, the experience is suggesting what your retirement may feel like, not what it will feel like. It’s a crystal ball to one possible future. It’s within your power to change that future.
“In retirement, unless you have established another occupation or volunteer position, you have nothing to do but putter around the house, read books, watch TV or chase information on the internet,” says Dr. Guy Baker of Wealth Teams Alliance in Irvine, California. “Forced captivity from the ‘Stay Safe at Home’ is similar because normal activities are suspended and you have no real control over the outside environment. So, you are forced to be inactive. Very similar to a poorly planned retirement.”
Still, you could have the perfect retirement plan, execute it precisely and find that you’re actually ahead of your milestones. And yet, other reasons might cause you to delay retirement.
“Whether due to boredom, an increased sense of professional purpose, or financial reasons, some people will absolutely decide that early retirement is not for them,” says Michelle Sloan Jones, Chief External Affairs Officer at Money Management International, Inc. in Atlanta.
Ultimately, though, it can come down to one single factor: how much of a social animal are you?
“Many people who dreamed of the day they wouldn’t have to show up for work find themselves lost without a place to go,” says Krueger. “After many long days at home, without interruption, without familiar faces at work, COVID-19 will be the reason some who thought they were ready to retire early will look forward to getting back to the office.”
Will the coronavirus quarantine convince you to retire early, or will what you see tell you to work as long as you can?
Ethan Taub, CEO of Goalry and Loanry in Newport Beach, California, says, “I think people will get a slice of what the lifestyle is like, and figure out if it is best for them.”