If you’re nearing retirement, the stock market crash may have caused you to rethink your plans. After all, with your nest egg potentially taking a hit, it’s natural to wonder if retiring now is still the right move.
Here’s the thing, though: Just because the market has taken a tumble doesn’t mean you should automatically put off retirement. In fact, there are several good reasons to stick to your original timeline – or even retire early.
Bill Schantz of Mid Atlantic Financial LLC shares a few considerations to keep in mind as you decide whether or not to delay your retirement date:
· Bill Schantz says the stock market is volatile
If you’re close to retirement, chances are you’ve been through a market downturn before. And while it’s never fun to see your portfolio take a hit, it’s important to remember that the market is inherently volatile. Over time, it has always rebounded – and there’s no reason to believe this time will be any different.
· You can’t time the market
Even if you could perfectly predict when the stock market would crash, there’s no guarantee you’d be able to sell off your investments before the decline and then buy back in at the bottom. That’s why it’s generally not a good idea to try to time the market – you’re likely to end up missing out on potential gains (or losing money) in the process.
· You can adjust your portfolio
If you’re retired or close to retirement, you probably have a good portion of your investments in stocks. But that doesn’t mean you have to keep all of your eggs in one basket. If the stock market crash has you feeling skittish, consider rebalancing your portfolio to include more fixed-income investments, like bonds. This will help reduce your overall risk while still giving you the potential to grow your nest egg.
· You can take withdrawals from other accounts
If you have a 401(k) or other retirement accounts, you’re not limited to taking withdrawals from just that account. In fact, depending on your situation, it may make more sense to take withdrawals from a traditional IRA or Roth IRA first. With a traditional IRA, you’ll pay taxes on the withdrawals – but if the stock market is down, your tax bill will be lower than it would have been if the market was up. With a Roth IRA, you won’t owe any taxes on your withdrawals – so if the market is down, you won’t have to worry about paying taxes on your gains.
· You may need the money
If you’re retired or close to retirement, you may find that you need to dip into your nest egg sooner than you thought. Whether it’s for unexpected medical expenses or major home repairs, there are a number of life events that can come up that may require you to have access to your savings.
Final Word from Bill Schantz
Bill Schantz says that you shouldn’t let the stock market crash cause you to delay your retirement. If you’re close to retirement, chances are you’ve been through a market downturn before – and the market will rebound. Consider rebalancing your portfolio to reduce risk, and take withdrawals from other accounts if needed. Most importantly, don’t forget that you may need to access your savings sooner than you thought – so don’t put off retirement any longer than necessary.