The consequences of retiring in a slow economy

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By: NathanielCopeland
on 16th Jul,2012

Almost 3 years have passed and the trend of economic slowdown in midsummer has maintained itself.
The consequences of retiring in a slow economy


It has been more than 5 years since the subprime mortgage crisis which left the American economy reeling in its wake but signs of economic recovery and growth are still feeble. Almost 3 years have passed and the trend of economic slowdown in midsummer has maintained itself. Growth within the employment sector is still somewhat tepid and stock market isn't showing too many positive signs.

As much as the economic problems have affected the average working citizen, the impact has been much greater for those nearing their retirement age or planning to retire early. The current scenario needs to be reviewed and new strategies need to be formulated in light of recent developments.

Social security and delayed retirement

Retiring early doesn't seem to be a financially sound option as of now. Economists and analysts maintain that continuing to work, for a few more years past the age of retirement or waiting at least till the time when signs of economic stability grows more prominent, is the best strategy at hand. The longer you work the greater benefits you can reap off your Social Security. Moreover, you will continue to receive employee benefits like health insurance and employer's contribution to your 401(k) fund. Working till you are 70 years of age seems to be the optimal choice since Social Security benefits don't increase beyond that point.

Higher education and temporary retirement

In case you are planning to retire early, resuming your education and going back to school seems like an intelligent option. You can spend a few years living the easy life of a student, add more educational qualifications to your resume and in the best possible scenario, you might be able to secure a job in a new field of work which interests you. Another upside of resuming your academic career is that you will have an edge in negotiating a larger pay packet since you have added more value to your resume.

Increased health insurance benefits under the PPACA

Health insurance has been one of the largest concerns for retired senior citizens as well as people opting for early retirement. The recent healthcare reforms introduced by the Obama administration have been joyously greeted by retirees and senior citizens. The short term impact have been quite positive given that the cost of prescription drugs has been slashed sharply for Medicare users while an entire plethora of preventive healthcare services have been made available to the public for free.

Glide paths and investment strategies

Investments have always been a huge concern for the soon-to-be-retired. After an entire lifetime of building assets which will see them through their retirement years, many people are finding that they haven't accumulated enough to see them through the years. Experts recommend that investors nearing their retirement age or people looking to set up a sound investment strategy, review and revise the changing mix of stocks and bonds (technically termed as Glide Paths) as the years go by. A conservative and somewhat defensive investment strategy should be adopted as you get older just so you are able to cushion the impact of adverse economic changes. Although being conservative with you investment strategy is a good option, a little bit of aggressive investing can help insure that you do not outlive your assets.

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