Phased Retirement: A Bad Time to Retire?

With the recent steep market downturns I’ve been reading more articles about whether this is a bad time to retire?  If your nest egg has suffered, will you have enough to live on comfortably?  Will the markets go even lower?  Will inflation continue to diminish your purchasing power?

Well, as they say, it sells papers.

But if 2 or 3 years ago you had decided it WAS a good time to retire and you had, now you’d still be retired and it wouldn’t be a good time to be retired.  At least from a financial perspective.

But here’s the thing, if you adopt a phased approach to retirement, then you’re using an approach similar to dollar-cost average investing to wind down your working career.  You may recall that with dollar-cost averaging you invest a certain amount every month no matter what the markets are doing.  If the markets are down, you end up buying more shares for the same fixed amount, etc.

Chances are great that over your long retirement you’re going to see market downturns, upturns and periods where things are relatively flat.

If you plan for and take several years to execute a staged retirement then you can continue to work part-time and save – or at least not tap retirement accounts – and you can choose to delay social security payments in favor of higher lifetime benefits later on.  You also don’t have to be concerned about picking the exact right time to leave the workforce.

Phase your retirement and you have more control over your entire retirement, not just the financial aspects.  You control how you invest your precious time.

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