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October 3, 2023

Rethinking retirement

By Soren & Gary E. Croxall

The coronavirus pandemic and the subsequent economic fallout has forced many people to rethink their retirement strategy. Whether you are mid-career and retirement is still a distance out, retirement is fast approaching, or you are a recent retiree wondering if the retirement plan you put in place is still applicable, here are a few considerations to keep in mind.


The recent market volatility and economic uncertainty is certainly unsettling. However, the good news is, if you are in your early to mid-career, you still have time to make adjustments to keep your future retirement goals on-track. Now would be a good time to re-evaluate your savings goals and review how your portfolio is invested. For example, if you utilize a retirement calculator to track your retirement savings goal, ensure the assumptions you’re using are realistic. They may need to be adjusted in light of recent events. Also, have you reviewed all the retirement savings accounts that may be available to you and do you understand how they work? A qualified financial professional can help you draft a formal savings plan, review different types of accounts, and explain how they work.

Nearing retirement or unplanned early retirement

If you are 5-10 years out from retirement, your plans may experience some unexpected events that may cause you to re-evaluate your retirement date. Depending on your individual circumstances, and if possible, you may want to consider delaying your retirement date in order to allow yourself more time to shore up retirement savings, pay down liabilities, and allow your investment portfolio time to potentially recover from recent volatility. You may also want to consider delaying major expenses in order to preserve resources.

We understand that for some, the recent downturn has meant that you may have lost your job and you are unsure if and when you may find another. An unplanned early retirement may mean whatever retirement plan you did have in place may need to be completely scrapped and a new plan may need to be considered.  If you are facing an unplanned early retirement, a few things you will need to consider right away are: what will I do for health insurance; what are my potential sources of retirement income and when do I plan on drawing from them; and what will I need to potentially withdraw from my portfolio assets to fill in gaps between my income and expenses? The answers to some of these questions may require you to reconsider or update previous retirement plans.

Also, if you haven’t been laid off officially but your employer is offering an early retirement incentive package, we highly encourage you to seek out guidance from a financial professional to fully understand what the offer entails and what the pros and cons of taking the offer might be prior to making a formal decision. It’s a major decision that needs to be thought through carefully.

Recent retirees

If you recently retired and are now relying on a combination of retirement income sources like Social Security and pensions along with withdrawals from your portfolio to cover your living expenses, now would be a good time to review your financial plan. Allowing yourself some flexibility with needed withdrawals from your portfolio is ideal. A major risk all retirees face, but especially those early on in their retirement years, is the “sequence of returns” risk. Essentially this is the risk that a poor performing market (especially early on in retirement) coupled with required withdrawals can compound losses and make it harder, if not impossible, for the portfolio to recover. If no adjustments are made, your portfolio could potentially be depleted sooner than anticipated. This is why you should try to be flexible in your withdrawals from your portfolio if at all possible.

Speaking of required withdrawals, in a previous article we wrote that Required Minimums Distributions (“RMDs”) from IRAs (including inherited IRAs) and certain defined contribution workplace retirement plans had been waived for 2020. However, at the time, there was no guidance for people who took their RMD early on in January 2020 (before the formal waiver was passed in Congress) and no longer wanted to take the distribution. The IRS now released guidance for those who took their RMD early and would like to put it back as if they never took it out of their account for 2020. You should contact your IRA custodian or retirement plan provider for guidance if you are interested in doing this. However, you will need to act promptly, as the current deadline is Aug. 31, 2020.

Gary E. Croxall, CFP®

Registered Principal of LPL                        

Soren E. Croxall, CFP®, CFA

Registered Representative of LPL

Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. LPL Financial and Croxall Capital Planning do not provide tax or legal advice.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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