The economic downturn has thrown an extra problem at older Baby Boomers who had planned to retire over the next few years: They now have less money at their disposal than they had projected.
Retirement portfolios are shrinking. Home equity is plunging. And Social Security faces an uncertain future. This trifecta of grim news means that all but the wealthiest Baby Boomers may have to review — and possibly rethink — whether their retirement target dates are still realistic.
The bottom line is this: Unless you're flush with cash, if you don't need to retire, don't. The stock market is tanking, eating away at your hard-earned nest egg. If you tap into your portfolio now, you'll deplete it further.
You'll also have to brace for the risk of poor market performance in the first few years after you retire. Meager returns during the first five years of retirement can significantly raise the chance that you'll outlive your money, especially if you're withdrawing more than the portfolio is earning each year, according to an analysis by T. Rowe Price, an investment firm.
"Anyone will tell you that you are better off not starting to draw down on your portfolio when the market is already heading into a bad period," says Norman Boone of Mosaic Financial Partners, a financial planning firm.
There's more in the full article.
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