Is Now a Good Time to Retire?

Many folks facing retirement ask: “is it a good time to retire?” Recent studies have reported that because of the bond market, inflation, and other factors, today may be the worst time to retire in a generation. But there are some things you can do to help get you to retirement – and more importantly, through your retirement years, according to Matt Allgeyer, Financial Planner at Wamhoff Financial Planning and Accounting Services.

 

 

Rising Costs:

1980 2013
Loaf of Bread $0.51 $1.65
Gallon of Gas $1.55 $3.56
First Class Stamp $0.15 $0.46

 

Investment Statistics: (According to a recent Bankrate Study)

1980 2013
# of Yrs $1 mil will last in retirement More than 30 years 25 years
Real Return, 30 yrs, on 60% stocks and 40% bonds 7.7% 1.9% (projected)
2-Year Treasury Bond Yields* Approximately 8% Approximately .32%
5-Year Treasury Bond Yields** Approximately 12% Approximately 1.4%

*The highest 2-year treasury note rate was 16.27% in 1981. The lowest was 0.16% in 2011
** The highest 5-year treasury note rate was 15.94% in 1981. The lowest was 0.56% in 2012

 

What you can do:

  1.  Actively manage your money and rebalance to ensure that you have a proper mix of investments.
  2. Diversify, both inside and outside of the market.
  3. Reconsider your ideas of what you think are “safe” investments. Many folks feel the bond market is safe, but recent performance may indicate otherwise.
  4. The first two years of retirement are crucial! They can make or break your ability to maintain income through your retirement, so be sure to have a plan for how you’ll withdraw funds, where you’ll withdraw from, and how you’ll continue to invest.
  5. If you’re properly diversified and actively manage your money, you have a better chance of being able to withdraw the traditional 4% from your portfolio (the four percent rule), or possibly more.