Should You Retire This Year? How to Plan for Retirement in 2023

You’ve probably dreamed of the day when you can finally say you’re retired. While it’s fun to dream about retirement, deciding you’re ready to retire may be more difficult than you had imagined. To help you make the decision, we’ve put together a list of six things you need to know about retirement in 2023.

1. A Jump in Social Security Benefits 

One big milestone on your path to retirement is having the money you’ll need saved. If you’ve been working with an agent, you probably have a pretty good idea of when your savings, retirement accounts and Social Security benefit will generate enough income to retire with confidence. The good news about retiring this year is that Social Security checks will get their largest cost-of-living adjustment in four decades, with benefits increasing by 8.7%. That means the average benefit for retired workers will jump to $1,827 per month, an increase of $146. 

2. Inflation Still Matters

While the sky-high prices of 2022 seem to be mostly behind us, it’s still important to understand how inflation can impact your retirement. Create and evaluate your budget to factor inflation into your retirement plan, and ensure you have a solid distribution plan in place to avoid overspending. Your Farm Bureau agent can help you discuss strategies for receiving your funds and managing inflation.

3. Making a Debt Check

If you are nearing retirement, it’s a good idea to evaluate your debt-to-income and debt-to-assets ratios, with the goal of reducing them over time. No mortgage — check. No car loan — check. Kids are out of college — check. It’s not to say you’re not ready to retire if you have debt but eliminating debt can make it easier to retire. If you currently have outstanding debt, look for ways to pay off loans faster. You’ll save yourself extra costs and be on the road to a financially secure future. Eliminating debt can also free up more funds to put in your 401(k), IRA, savings, etc.

4. Planning for Healthcare

Medical expenses can quickly add up, especially during retirement. If your medical coverage is through your employer or your spouse’s employer, you’ll need to acquire health insurance outside of an employer before you retire. Some people choose to wait to retire until age 65 when they can qualify for Medicare. And if your last day of work is in the near future, take advantage of your benefits while you still have them — see the doctor, see the dentist, get refills ordered for your prescriptions, or finally go to physical therapy for those lingering aches and pains.

5. Part-Time Work Can Help

Your work schedule has been a big part of your life for a long time. Transitioning into retirement can be a big change, especially if you don’t have a plan for how you’ll spend your newfound “free” time. Before you retire, make a list of things you want to do — hobbies, traveling, gardening, spending time with family and friends, working with charities. And consider picking up a part-time job to maintain an income. Every dollar earned is another dollar of capital preserved in your nest egg, which is essential during a bear market.

6. Maximizing Social Security

Did you know there are ways you can maximize your Social Security benefit? You can start receiving Social Security benefit payments as early as age 62, but you won’t receive as much as you could. People who retire in 2023 will have the opportunity to earn a higher maximum benefit, depending on their age at the time of retirement. The biggest boost will be available for those who wait until age 70 to retire in 2023, with the maximum jumping $361 to $4,555 per month. 

Make Moves Now to Prepare for Your Future

A recent poll from The Associated Press and NORC Center for Public Affairs Research found that nearly one-quarter of Americans don’t plan on retiring, according to cbsnews.com. Additionally, 56% of younger adults said they feel unprepared for retirement. If this sounds like you, connect with a Farm Bureau agent to learn how you can make moves now your future self will thank you for.