Retiring in 2021? Here’s what you need to know.

retirement planning, investments, retire in 2021, financial planning, social security

2021 has been an interesting year for the stock market and investing. Many Americans have taken the challenges presented in 2020 as well as the runup in the stock market, as an opportunity to retire. Others were forced into an early retirement because of circumstances outside of their control. With all the uncertainty of 2021, it can be difficult to make decisions about retirement. If you’re retiring in 2021 or soon after, here’s what you need to know.

  • In the middle of chaos, it is best to stick to time-tested investing principles. It is impossible to predict when the next stock market correction will be. While it is unhealthy to look at the stock market levels each day, it is healthy and wise to continue to invest regularly. You may not understand every detail about how the Federal Reserve chairman is controlling interest rates and how that effects the real estate market or how a power loss in Texas is affecting prices for paint and materials at your local hardware store. Never try to time the market, but always stick to your investing plan while being open to adjusting if you need to.  
  • Your Social Security benefits will rise with inflation. Thankfully the Social Security Administration (SSA) raises your monthly benefits with inflation each year based on the research from the Bureau of Labor Statistics. Earlier this year we saw inflation of 5.4% year over year.

The Consumer Price Index for All Urban Consumers increased 5.4 percent, not seasonally adjusted, from June 2020 to June 2021, the largest 12-month advance since the year ended August 2008.[1]

  • You need to be able to beat inflation which is why you should be investing in stocks. Inflation rose 5.4% last year! That means that your $100,000 sitting in checking is only worth $94,600 now, after only one year. Imagine the eroding power of inflation over 40 years. If you don’t have a portion of your money invested in the markets, then your money is losing purchasing power each year.
  • When it comes time to call it quits and start enjoying your retirement, you really should sit down with a professional to help you walk through all the planning items relating to health insurance (Medicare), when to start taking Social Security benefits, how to invest for your risk tolerance, keeping taxes down, saving taxes by giving to charity strategically, planning for long-term care, and leaving a legacy for your family. These are just a few of the planning items related to your future. There are plenty of people out there who call themselves advisors, but instead of giving good advice they just want to push a product on you. Regardless of your unique situation, they will recommend the expensive product to you and everyone else who meets with them. Rather than meeting with someone predatory like this, it is best to meet with a CERTIFIED FINANCIAL PLANNER™ professional who meets the high standards of professionalism, competence, and integrity awarded by having that credential. At American Financial Planning, both our advisors Maynard and Daniel are CERTIFIED FINANCIAL PLANNER™ professionals who would be happy to give you a free consultation regarding your future. Give us a call today.

[1] https://www.bls.gov/opub/ted/2021/consumer-prices-up-4-7-percent-since-february-2020.htm

As a financial advisor Daniel is passionate about helping people achieve their dreams and greatest potential in life. He enjoys strong coffee, thick books, and long bike rides in his hometown of Roanoke, VA.

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