You Were Planning to Retire This Year: Should You Go Ahead?

An older woman looks thoughtful as she looks into the distance.

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published 29 June 2025

When I watched Jerome Powell speak during the Fed’s May meeting, one clear message was that the likelihood of higher prices and higher unemployment have risen — aka stagflation. Add that to the fact that the S&P 500 fell almost 20% from its 2025 highs in a two-month period.

If you are planning to retire this year, it’s understandable if you’re scared. It’s understandable to want to punt. But it may not be necessary.

Below, I’ll go through three factors to help you make the decision that’s right for you.

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1. How close are your plans to fruition?

When we run financial plans, we typically want the likelihood of success at 80% or above to feel comfortable telling clients to turn in their keys or shop their business.

If the plan is 95%, without a dramatic change in lifestyle, they probably have plenty of money.

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At 80%, every decision matters a little more. You’d better hope that none of your assumptions was too optimistic.

If Powell is right and things go up in price, that 80% Monte Carlo simulation could easily drop sharply with a small increase in inflation assumptions.

If you want to double-check your plan, you can access the free version of the software we use online.

The 80% scenario (or below) is where I would consider hanging on just a little bit longer. It will help you sleep at night. As we enter a more uncertain economic environment, it also makes it more challenging to re-enter the labor market if you have any regrets.

2. How will market returns early in retirement affect you?

If you retired in 2010, 2020 or 2022, the “sequence of returns” was wind at your back. Markets probably drove your portfolio much higher than what you spent.

Sequence of return risk is the other side of the coin and is essentially timing risk. What if you retire into a down market?

I’m certainly not predicting what the markets will do in the next one to three years, but a stagflationary environment is especially challenging for retirees. Slowing growth makes equity markets fall.

Rising inflation forces interest rates up, which causes bonds to fall. If you have a balanced portfolio, when stocks fall, you can sell bonds to create income.

When bonds fall, you can sell stocks to create income. When both fall, hopefully you’re cool skipping that vacation.

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If you saw your portfolio drop sharply early in 2025, this is a good time to re-evaluate and make sure that it still accurately represents your risk tolerance, return needs and time horizon.

You may be able to take some risk off the table without impacting your lifestyle.

3. Are you retiring from something or to something?

Retiring from something means that you’re probably not happy in your current state. Worrying about money in retirement will be worse.

Once again, if your plan is cutting it close, and your main gripe is your current situation, I’d encourage you to tough it out a bit longer.

Retiring to something is almost always a better situation. If you’re retiring to something, you might be missing out on time with your grandkids. You may be missing the years where you’re mobile enough to take that big trip. You’re missing out on memories, and those are hard to buy back later in life.

If this is the case, and your plan is close, see how much you’d have to cut from your monthly spending to make sure the plan is sustainable. That cut may be worth the time you get back.

If you’re retiring to something and your plan is fully funded, stop reading, start retiring.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.