As the pandemic drags on long past the one-year mark, more and more older American workers are calling it quits.
Since the beginning of the pandemic in March 2020, the number of retired people has increased by about 1.7 million more than expected. That’s according to data from the Schwartz Center for Economic Policy Analysis at The New School for Social Research.
To put it another way, nearly 2 million more American workers than expected have retired since the start of the pandemic — and every single one has had to make a few important money decisions before calling it quits.
If you’re among those looking towards retirement as the pandemic continues, make these key financial decisions first.
1. You have to decide whether you’ll downsize or move for retirement
If you’re living in a large home or a big city, you might be considering downsizing or moving for retirement. And that’s something you should decide before you leave work, since it will likely impact all of the decisions that follow.
Selling your home and downsizing is a popular decision for retirees, and it could help your savings stretch. It might mean opting for something smaller, or downsizing what you’re responsible for financially.
Financial planner Jude Boudreaux of The Planning Center says it’s worth reconsidering your housing in retirement, since it’s one of your biggest expenses. “I think renting is not necessarily a bad choice. If you’re selling a home or moving to a new place, renting for a little while [things get] sorted out is not the worst thing around,” he said.
Moving to be closer to family, or for a lower cost of living, could be big benefits for retirees, and it’s something you’ll want to decide before your last day of work.
2. Decide if you plan to work again in retirement
Before leaving work, you’ll want to decide how you’ll fill your time in retirement. For some retirees, that means going back to work.
Finding work that’s meaningful and enjoyable to you can bring not only a social connection and a way to fill time, but also some extra money.
“Little bits of income in retirement go a very long way, too, so they’re not to be underestimated,” said Boudreaux. “If you take your skills and tie it to something that already has meaning in your life, it’s an extra positive type of a thing.”
If going back to work is your plan for retirement, consider what type of work you’ll do, and start looking into available work before you decide to leave your current job.
3. Plan for healthcare after employment
If you’re already at age 65, you don’t need to worry about healthcare — you’re eligible for Medicare. But anyone not there yet needs to consider this before leaving work, Boudreaux said.
“Especially if somebody is retiring before Medicare, then that decision looms large. I’ve had clients who delayed retirement to get to Medicare or get to age 63 and a half so they could keep COBRA and then get to Medicare,” he said.
If you’re not yet age 65, there are options for healthcare in retirement. COBRA coverage can be a way to keep the coverage you have through your employer, though it can be costly. Going to the federal Health Insurance Marketplace can be another way to get and pay for the coverage you need until you’re eligible for Medicare.
4. Decide when you’ll take Social Security payments
Deciding when you’ll take Social Security payments will affect your cash flow each month, not just now, but in the future, too.
Your Social Security benefit will vary based on the age you decide to take it, and Boudreaux advises taking it as late as possible if you’re healthy. “If we can delay Social Security, we just start with a higher benefit base,” he said.
Sometimes, it’s worth the wait. “I would rather see clients spend from their 401(k)s for a few years to get the largest possible Social Security benefit than I would see them take Social Security early and leave some extra money in the retirement plan,” he said.
By holding out on taking Social Security payments as long as possible, you could get more money later in retirement and stretch your savings.