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The Great Resignation: Timing is Everything

The Great Resignation: Timing is Everything

June 15, 2022

Have you considered a career change, early retirement, or a job shift due to recent events in your life or the world? If so, you might be part of the group of Americans roped into the “The Great Resignation.” If you haven’t been following the news closely, you might be wondering what that is. The Great Resignation describes the elevated rate at which employees have quit their jobs starting in the spring of 2021 amid strong labor demand and low unemployment. 4.5 million workers left the workforce this March alone, according to the U.S. Department of Labor.

The Great Retirement Boom

In 2008, the oldest baby boomers reached age 62. This coincided with the "Great Recession," which contributed to a slowed economy. Jump to 2021, when the economy had distanced itself from those events and just over half of adults aged 55 or older had exited the workforce. The percentage of adult Americans aged 65 to 74 who had left the force was 66.9 percent. In short, many people decided to hold off on retiring and wait a few years, meaning it's not an early retirement so much as a delayed one.

The Great Resignation Boom

The COVID-19 pandemic created a period of change in which many individuals, for the first time, started to rethink their work routines. Some decided it was natural to work less, transition to new things, or retire altogether. Understandably, someone reaching the end of a long and rewarding career may choose to exit their job. Still, with retirement on the horizon, it’s essential to think about your financial options and ensure you’re making the best decision fiscally before jumping to hang up your hat.

Now What?

If you're thinking about changing your time horizon or retirement goals, we should discuss where you stand and the drawbacks and advantages of retiring in the current environment.

Consider a Roth IRA Conversion – A Roth IRA conversion can be a powerful tool for lowering your taxes over a long period. Still, this conversion strategy needs to be discussed and analyzed before being performed. While typically, I would recommend waiting until later in the year when more is known about your income and tax situation for the year, using periods of market weakness, whenever they may occur, can take advantage of temporarily depressed account values by locking in taxable income at lower amounts.

Time it Right – As inflation soars and interest rates rise, it’s essential to consider whether right now is the best time to resign and if your retirement funds are prepared for an inflated period. Two years ago, even three years ago – you might have thought you were a year away from retiring. Still, with the current market environment coupled with inflated prices on almost everything you’re buying now, it might be wise to pause and rethink your retirement date and ensure your long-term goals are correctly aligned with your financial plan.

Nevertheless, if you feel you’re ready to retire or if the past two years have set you back, we need to discuss what your retirement options are so that you can feel confident in the next season of your life. Based on your expected expenses, sources of income, and desired lifestyle during retirement, we can develop a strategy to produce the necessary financial resources for your golden years.

Contact our office today to receive a complimentary consultation of your retirement account(s).