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Dreaming of an early retirement? Possible, but requires good planning – Presented by Mark K. Lund, Financial Advisor in Utah

Financial Advisor Utah

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.

“Congrats, if you are near retirement and your portfolio is way up,” Banchett said, but then offered this warning. “Let’s say you retire early and enjoy yourself by tapping the portfolio, and then have a severe market correction at 70. You are likely not employable and could still have another 25 to 30 years in retirement.”

His prediction has come true sooner than he thought. 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.

When deciding on the best time to retire, be sure to first talk to your trusted advisor who can help you weigh your possibilities, look at various real-world scenarios, and assist you in creating a plan designed to offer the most resilience in an uncertain future.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc., A Financial Advisor in Utah
11576 S State Street, Bldg. 1002
Draper, UT 84020

Sources:
1. http://go.pardot.com/e/91522/it-with-no-regrets-51634892301/878m2r/1686511705?h=ERiyCDEx4TAiUq_VKTr-05kKlLkULUE7CvQy93ubQ0M
2. http://go.pardot.com/e/91522/ning-to-work-not-for-paycheck-/878m2v/1686511705?h=ERiyCDEx4TAiUq_VKTr-05kKlLkULUE7CvQy93ubQ0M

This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

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