Retirement Dream BLOG2

Dreaming of an Early Retirement?

02/08/2023 Written by: Kristine Simmons

A lot of Americans would like to quit their jobs for good. For anecdotal proof, just look at the booming sales in lottery tickets. But many people aren't waiting to strike it rich to leave the workforce before the traditional retirement age.  According to Barron's, baby boomers (the 70-million-strong cohort born between 1946 and 1964), have been in the midst of a retirement boom for more than a decade.1

COVID-19 has accelerated this trend. Miguel Faria-e-Castro, an economist with the St. Louis Fed, estimates that there have been more than 3 million "excess retirements" during the pandemic. These are in addition to the millions who were expected to retire during that period.  Additionally, a survey by the New York Fed found that just half of Americans are expecting to work past age 62.

Some people have been forced to retire early because of covid related job losses. Workers over 50 who've been laid off as a result of the pandemic have found that despite the record-low unemployment rate, companies are looking to hire younger job candidates. Experienced workers can expect to be paid more and businesses are wary of onboarding employees who may be retiring soon, anyway.  Others have chosen to retire early, having seen their portfolios grow at record rates over the past two years. But as recent volatility has shown, it's not wise to expect the stock market to grow indefinitely at double-digits.

Back in the fall of 2021, when it seemed the market could only head one way, David Blanchett, head of retirement research at QMA, worried that people were basing their early retirement decisions on unrealistic expectations.  A recent report by AARP has found that 1.7 million Americans who retired a year earlier have returned to the workforce — 3% of all retirees. Among the reasons given for this return include the effects of inflation, stock market woes, and rising health care costs.2

The point isn't that early retirement isn't possible or not a worthy goal—just that the decision to leave work before age 65 should not be based on short-term market conditions. People who decide to retire early, but are not ready, are setting themselves up for financial crises down the road.

1. http://go.pardot.com/e/91522/it-with-no-regrets-51634892301/878m2r/1686508051?h=17qe6n8vyjLdXZ4ubecU01CWPEIFF80mLNtEGTUHr3I
2. http://go.pardot.com/e/91522/ning-to-work-not-for-paycheck-/878m2v/1686508051?h=17qe6n8vyjLdXZ4ubecU01CWPEIFF80mLNtEGTUHr3I

Charitable Donation square edit
Charitable Giving
Wealth Management04/24/2024

When developing your estate plan, you can do well by doing good. Leaving money to charity rewards you in many ways. It gives you a sense of personal satisfaction and can save you money in estate...

Financial Plan square
Don’t Let Emotions Get in the Way of Your Financial Plan
Wealth Management04/03/2024

Taylor Tepper, a financial journalist for Forbes, writes that when the vast majority of us try to trade stocks for short term gain, we do a horrible job. "We sell them when we should buy," he says,...

60 40 allocation square
Three Reasons Why the 60/40 Allocation can be a Good Starting Point
Wealth Management03/13/2024

Many people have the misconception that the primary goal of investing is to make as much money as you can as fast as you can. Unfortunately, you can't just order up outsized returns like a delivery...