For some, COVID-19 means early retirement


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Editor’s Note: This story originally appeared on SmartAsset.com.

COVID-19 has affected Americans in many different ways.

And while some workers say the pandemic has delayed retirement, a study from Northwestern Mutual shows that young people want to retire early.

If you are planning to retire early, a financial advisor can help you create a financial plan to reach your goals.

Here are the details of that study and how you can retire early.

Millennials and Generation Z are planning to retire early

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Perhaps the most interesting news found in the study is that, in general, the two younger generations in the workforce currently plan to retire before their 60s – Generation Z at an average age of 59.4 and Millennials at 59.5.

The overall projected retirement age is 63.6, up from 63.4 last year.

There are a number of reasons why people plan to retire early. Some of them that apply to younger workers include:

  • Desire to spend more time with loved ones (42%).
  • Focus on hobbies/priorities outside of work (33%)
  • Achieving their personal mission is more important than saving more (29%).

However, turning this dream into reality will require more than just a will – it will take a lot of work by these young workers to put themselves in the right financial position.

“Planning is not a one-on-one exercise,” Christian Mitchell, executive vice president and chief customer officer of Northwestern Mutual, said in a statement. “It requires constant maintenance and flexibility to respond to changing conditions.”

“With so many people reconsidering their financial schedules this year, active planning should be a priority,” he added. “It requires attention, engagement and a willingness to take action, and having the support of a trusted advisor is critical in this process.”

Why do some people postpone retirement?

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While younger Americans tend to retire early, many people generally see themselves delaying retirement by three to five years due to the pandemic.

About a third of those who delay retirement say their schedule has changed by at least a decade.

The most common reasons for delaying a person’s retirement schedule include a desire to work and save extra money. Newfound flexibility at work, concerns about rising health care costs, the need to plunge into early retirement savings, and the need to care for relatives or friends influenced those decisions to continue working.

“The economic environment created by the COVID-19 pandemic has prompted a lot of people to re-examine their financial lives,” Mitchell said. For some, the prospect of early retirement seems more achievable, while others are adjusting to the delays. Either way, having a comprehensive plan is critical to overcoming uncertainty and reaching your goals.”

How do you get early retirement?

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If retiring early is part of your life plan, there are some steps you should take to make that a reality. The first and most obvious is to take advantage of any workplace retirement plan that your job offers, such as a 401(k).

Save as much as you can afford each pay period, making sure you have an employer match available to you, because this is free money that you can invest tax-free.

Another important point is budget preparation and adherence to it. A big part of smart financial planning is spending smart, and thinking about it ahead of time is the best way to make sure your spending habits don’t get you into trouble in the long run.

Pay attention to the allocation of your assets within your investments. When you’re younger, you can take on more risk and build a portfolio mostly around stocks and other stock investments.

As you get older, you’ll want to shift more toward bonds, annuities, and other safer investments that will protect your assets rather than leave you contingent before you plan to retire.

Finally, consider getting professional help from a financial advisor who can help you create a plan for your goals and needs.

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The COVID-19 pandemic has affected American life in many ways. One change is to change the way many people plan to retire.

Younger people want to retire early, while others are preparing to work for at least 10 years longer than they originally planned.

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