Retirement is the day you leave your job, go home, and never look back. Nevertheless, retirement is not always what is anticipated, and a lot of retirees regret the choices they made before quitting their jobs. How much have you prepared yourself for retirement? How much money will you really need? And what about the income sources that make up your retirement savings, such as your IRA or 401(k)? Are you well-versed in determining when to file for Social Security benefits? We’ve created a list of some of the most common retirement mistakes and advice on how to prevent them. Check to see if any of these mistakes seem familiar:
Putting Off Saving
Retirement means saying goodbye to your job and all of the benefits, bonuses, and pay that go along with it. Consequently, a lot of retirees learn too late that they ought to have saved more. And this is frequently the result of them starting to consider saving way too late. Many people only start saving in their 40s or 50s. More than 25%* of retirees who have not saved enough put their lack of preparedness to blame for this retirement mistake.
Disregarding Inflation
It makes sense that many retirees would overlook inflation while planning their retirement. After all, the country saw virtually nonexistent inflation for nearly a decade. But as prices climb, more people regret not considering how inflation may affect their retirement more carefully.
Concerns about inflation and how it can affect their retirement are shared by more than half of retirees.* Annuity sales have actually increased to all-time highs recently, which could be partly explained by worries about inflation. An annuity is a financial tool that can offer you a series of payments that are guaranteed to last you the rest of your life (backed by the claims-paying ability of the carrier). The potential to combat inflation using an optional add-on called an income rider is one big advantage of an annuity. Are you considering one of these products? Contact us to learn more.
Moving On a Whim
Many people who are getting close to retirement find it hard to resist the temptation of nicer destinations with warmer climates. You could be thinking about moving to one of the many retirement communities along the beach, maybe to Florida. Our suggestion? Examine the area before making a commitment. Moving to a completely new place and uprooting yourself without any idea of what to expect is another big retirement mistake. Far in advance of when you plan to retire, take extended trips there to familiarize yourself with what will be your new home. This is particularly true if you intend to retire in another country, where you may find it difficult to adjust not only to a new place, but to new laws, customs, and languages.
Taking Deals That Seem Too Good to Be True
Decades of planning and hard work are the cornerstones of a successful retirement. There are no shortcuts. Nevertheless, Americans lose hundreds of millions of dollars* ever year to scammers and get-rich-quick schemes, and elder fraud is rife. Have you been presented with a deal that seems “too good to be true”? They frequently come with requests for private financial data, including credit card and bank account info or Social Security numbers. Alternatively, you may be offered some kind of reward, but told you can’t claim it until you wire money or pay a fee. Furthermore, exercise caution against—in fact, flee immediately from—anyone who pushes you to make a decision right away or who advises you not to seek the counsel of an unbiased third party.
How would you react if you suspected you were being conned? The FTC advises using Google or another search engine to look for the company name and add the terms “review,” “complaint,” or “scam.” You can also inquire with the state attorney general or the local consumer protection office to see if it has received any complaints before. Remember to file a complaint with the FTC as well.
Taking Social Security Benefits Too Soon
Although most workers’ current full retirement age is between 66 and 67, the Social Security Administration allows people to start receiving retirement benefits as early as 62. However, you might want to wait if you can afford to. Many people regret drawing Social Security payments too soon. There is a major downside associated with this; you could see up to 30% permanent reduction in your monthly benefits.* Delaying claiming by living off your portfolio for a few years is probably beneficial. Alternatively, to help bridge the gap, if possible, prolong your stay at work or take on a side job. These days, there are plenty of creative methods to earn extra money.
Neglecting Long-Term Care
We all want to live healthy, active lives far into our retirement. Regular checks with the doctor, coupled with a good diet and lots of exercise, are beneficial. But even the healthiest retirees can fall ill, and as you approach your 70s, 80s, and 90s, aging will unavoidably take its toll on your body even if you don’t have a serious medical condition. It’s crucial that you can afford long-term care for this reason. Another significant retirement mistake that many workers make is not being able to afford long-term care.
If you wait too long, long term care rates may be too high, or you may not be able to get coverage. Although there are some options for covering long-term care costs, they’re all fairly expensive. If you can afford the premiums, think about getting long-term care insurance, which covers some but not all of the costs associated with a nursing facility. Some retirees regret not having purchased long-term care insurance in advance when they were younger, and it might have been less expensive.
How Will You Spend Your Time?
Your jobs provides structure to your life five days a week; the weekends are for unwinding and doing housework, and then you start the cycle over on Monday morning. However, after you retire, you find yourself with a sudden abundance of free time. How are you going to spend your time once you retire? Have you thought about it much? It’s crucial to plan your time spent in retirement with almost the same attention to detail that you do your income. Consider taking up a part-time job doing something that you’re passionate about, for instance. You might be able to take your casual interests and hobbies to new heights now that you have more free time.
