It’s difficult enough to retire during a bear market, and the retirement prognosis for 2023 also considers several other significant risks, including high inflation and rising interest rates. Together, these developments have produced a tumultuous climate that even the most cautious retirement planners would find unsettling.
The following list provides the top five strategies to keep an eye on in 2023 if you plan on retiring.
Postpone taking Social Security
Any retirement discussion should include a thorough examination of your Social Security plans.
Social Security is highly significant since it provides guaranteed income indexed for inflation. The program can assist you in coping with growing inflation, as evidenced by the cost-of-living adjustment (COLA) for 2023 was a sizable 8.7%.A fundamental Social Security maxim is to postpone receiving payments as long as possible, especially in light of increasing inflation.
Today’s retirees have a decent chance of living past the point where delaying benefits results in larger payments that more than offset the smaller checks you forgo in your early to mid-60s.Here is the strategy’s second component: Utilize other retirement income sources, such as your 401(k) or individual retirement account, before you begin receiving Social Security benefits (IRA).
Reconsider Your Housing Options
Significant improvements are being made to housing expenses. Prices in several once-hot property markets are declining due to rising mortgage rates. Even so, many home costs are still out of reach for seniors. Take another look at where you want to retire and even reevaluate where you want to spend your golden years because these changes may persist longer than the present market collapse.
What is your strategy for health care?
At age 65, Americans are entitled to sign up for Medicare; there may also be consequences for doing so late. Plan to enroll in Medicare in the months before turning 65 to give coverage time to begin. Your retirement healthcare strategy doesn’t end with Medicare enrollment.
A typical American couple is expected to spend $315,000 during retirement on uninsured medical expenses, such as copays and additional premiums. This is more than the $300,000 projected from the previous year. If you retire before age 65, you must also have your health insurance before Medicare begins. How does the Affordable Care Act (ACA) stand up? Does your business offer retiree health coverage in any way? Plan ahead before you are forced to make these decisions.
Not Skipping Self-Care
Another sensible action to take before retiring is to take care of any outstanding medical issues. Visit the doctor or dentist, get those dental implants, update your eyeglass prescription, or attend back pain rehabilitation. Utilize all of your benefits while they are still available and while you are confident you will be able to see your current healthcare providers.
Calculate Your Retirement
Even though it may seem obvious, you should sit down and calculate your retirement expenses. According to a Northwest Mutual study, fewer Americans know how much money they’ll need for retirement.
The 25x rule, the 4% rule, and the $1 million objective are just a few of the many strategies available for this challenging undertaking. These basic recommendations can aid in getting you going. It’s crucial to list your income sources—including Social Security, pensions, annuities, inheritances, and IRAs—and total up all of your expenses before making the estimate. A flexible budget is the desired outcome.
According to the current financial landscape, 2023 will likely be the worst year since the Great Recession for retiring. But some perspective is necessary. Despite the S&P 500’s year-to-date decline of approximately 17%, it has increased by around 10% since 2020’s conclusion and about 50% over the previous five years.
As usual, what applies to you personally is what matters most.