15% of Workers Are Delaying Retirement Because of COVID-19. Should You?
When the coronavirus outbreak first hit, a lot of people saw their worlds turned upside down. Not only did the economy shed millions of jobs within weeks, but many people who didn’t get laid off encountered added expenses or some degree of income loss that impacted their finances in a negative way.
Now, 15% of Americans say they’re postponing retirement because of the pandemic, according to a recent Nationwide survey. But should you plan on doing the same?
The stock market came back roaring
In March 2020, investors experienced their first bear market in more than a decade. As the pandemic took hold, stock values rapidly plunged, sending many investors into a panic.
Back then, it seemed like a widespread retirement crisis was about to ensue, with millions of people being forced to delay that milestone as their portfolio values took a whopping hit. Only that crisis, thankfully, never really came to be. While stock values did decline in early 2020, the market managed to recover well before the end of the year — a testament to the value of leaving your investments alone when things go south.
So if portfolio values recovered, then why are so many people delaying retirement? It could be that while their investments did regain their value, some were forced to hit pause on their retirement plan contributions for the better part of 2020. And that alone is a good reason to work longer.
Should you postpone your retirement?
If your finances took a hit during the pandemic, you may be wondering if delaying retirement is something you should contemplate. The answer? It depends on your age and how your finances were impacted.
If you’re decades away from retirement, it’s easier to recover from a temporary blip so that if, for example, you didn’t manage to set aside any money last year in your IRA or 401(k) plan, it doesn’t mean you’re destined to fall short financially if you stick to your original retirement date. On the other hand, if you’re only a handful of years away from retirement, were short on savings before the pandemic, and had to pause contributions to focus on near-term expenses, then you may be better off working a few extra years to ensure that your IRA or 401(k) balance is where you need it to be.
Furthermore, if you were hoping to retire very soon — say, within the next year — you may want to consider delaying that chapter of life until things improve even more with regard to the pandemic itself. Though the country on a whole is finally in a better place, variants continue to pose a threat as a large chunk of the population remains unvaccinated.
Since we don’t know if restrictions (travel-related or otherwise) will become necessary this winter once people start congregating more in enclosed spaces, you may want to stick to your current routine if you feel it’s safe and working for you. Or, to put it another way, if you’re able to do your job remotely or feel safe working in your office, you may want to stick with that setup and ride out the pandemic a bit more rather than leave your job only to wind up disappointed when you can’t travel or enjoy retirement to the fullest due to circumstances outside your control.
All told, there’s no right or wrong answer. But one thing that is clear is that a lot of people are reassessing their long-term plans in light of the events of the past year. And no matter what decision you ultimately land on, it may not hurt you to do the same.
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