Retirement Retirement Planning

7 Reasons 2025 is a Terrible Year to Retire

Considering retirement in 2025? Here's why it might be wise to wait.

By Adam Palasciano

Edited by Chris Kissell

Updated April 21, 2025

Retirement is a milestone that requires careful timing. If you have been planning to retire in 2025, recent turmoil suggests that waiting might be a better choice.

From market volatility to potential government policy changes, here are some reasons you might want to change your retirement plan.

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The stock market has been tumbling

The implementation of President Donald Trump's new tariff plan has heightened fears of a global economic downturn. Soon after Trump announced his tariff plan on April 2, the Standard & Poor's 500 index began to plunge.

The stock market is no stranger to volatility, and what goes down can quickly reverse course and turn up again. However, retiring at a time of such turmoil can be risky. You might want to wait to see how things play out.

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A falling market subjects you to 'sequence of return risk'

Retiring in a declining market exposes you to "sequence of return" risk. This risk arises when you make withdrawals after a market downturn has left you with a shrinking investment portfolio.

Withdrawing money at this time locks in your losses and reduces the potential for your portfolio to fully recover. That puts you at a higher risk for potentially depleting your retirement savings faster than anticipated.

Delaying retirement gives your accounts time to recover

Historically, the U.S. stock market has shown resilience and has always rebounded after periods of decline. That was true after the Great Depression, and it's also been true in more recent times, such as after the Great Recession and the COVID-19 pandemic.

By postponing retirement, you give your investments the opportunity to recover, potentially restoring your portfolio's value.

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Tariffs might send prices higher

The recent introduction of tariffs is expected to increase the cost of various goods, in some cases significantly. This might include automobiles, electronics, food, and more.

Such inflationary pressures can erode your purchasing power, making it more challenging to maintain your desired lifestyle in retirement. If tariffs eventually are rolled back, prices might come down, creating a better situation for those who want to stop working.

Social Security is facing cutbacks

The Social Security Administration has announced plans to reduce its workforce by 7,000 employees, dropping the number of employees to a total of approximately 50,000.

It's possible that such layoffs could lead to delays in benefit processing and potential reductions in services. Relying heavily on Social Security during this period may pose challenges, at least until things settle.

Older workers can save more for retirement than in the past

A new change to federal law allows older workers between the ages of 60 to 63 to contribute larger catch-up contributions to their retirement accounts. The new rule went into effect at the start of this year.

If you are in this age group, it might make sense to delay retirement so you can use this bigger contribution limit as an opportunity to bolster savings before retiring. Doing so can boost your financial cushion, offering greater security when you eventually decide to retire.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

Trump might end some taxes on pay

Trump has suggested eliminating taxes on tips and overtime earnings. The aim is to increase take-home pay for workers in service and hourly positions.

If implemented, these changes could provide additional income that can be directed toward retirement savings.

Bottom line

Given the current economic and political climate, 2025 might present some challenges for those considering retirement.

Staying informed and adapting to changes can leave you better positioned for a stress-free retirement. So, consider whether now is the time to retire, or if putting post-work life on the back burner makes more sense during 2025.

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