For countless workers, retirement represents the ultimate goal: the day you leave work, return home, and never look back. Retirement, however, is not always what is expected of it, and many retirees regret the decisions they made before leaving work. As retirement draws near, several questions need to be considered. However, be sure you’re making the right decisions far in advance. To what extent have you prepared yourself? How much money will you actually need What about the sources of income that comprise your nest egg, such as your 401(k) and IRA? Do you have a good handle on when to claim Social Security benefits? To help, we’ve compiled a list of some of the biggest retirement mistakes and how to avoid making them. Take a look to see if any sound familiar:
Putting Off Saving For Retirement
Retirement entails bidding adieu to employment, and all of the accompanying salaries, incentives, and perks. As a result, many retirees discover after the fact that they should have saved more. And, this often occurs because they started thinking about saving far too late. Many wait until their 40s or 50s to begin saving. Some retirees also neglect other aspects of developing a strategy, on top of starting savings too late. These are retirement mistakes that many are only now realizing; over 25%* of retirees who have not saved enough blame their lack of preparation.
Ignoring Inflation
It’s understandable that many retirees might neglect inflation while creating a retirement strategy. After all, the nation saw almost nonexistent inflation for almost ten years. However, as prices rise, more individuals regret not paying more attention to how rising costs might impact their golden years.
Over half of retirees* share concerns regarding inflation and its potential effects on their retirement. In fact, annuity sales have reached all-time highs in recent years, which may be partially attributed to concerns about inflation. An annuity is a financial product that can provide you with guaranteed lifelong income (backed by the claims-paying ability of the carrier), either in the form of a series of payments or a single lump sum. One benefit of an annuity is the ability to counteract inflation with an optional feature called an income rider. Interested in these products? Reach out to us to learn more.
Relocating On a Whim
For many approaching retirement, the allure of warmer climates is simply irresistible. You may be planning to retire to Florida, or perhaps one of the many retirement communities close to the beach. Our recommendation? Take a look around before deciding to commit. Uprooting yourself and moving to someplace totally different without knowing what it’ll be like is another major retirement mistake. Take long vacations in your chosen location far in advance of your planned retirement date, to become acquainted with the way of life. This is especially true if you’re thinking about retiring abroad, where new languages, laws, and customs might overwhelm you.
Falling For Offers That Look Too Good to be True
The key components of a prosperous retirement are decades of strategizing and diligent effort. There aren’t any shortcuts. Still, get-rich-quick schemes and other scams cost Americans hundreds of millions of dollars* annually, and elder fraud runs rampant. Given an offer that seems “too good to be true”? You’ll often find they come with unwarranted demands for sensitive financial information, such as Social Security numbers, bank account, and credit card numbers. You may also be asked to wire money or pay a fee before you can receive a reward of some kind. Additionally, be cautious of—in fact, turn and run from—anyone who encourages you not to get advice from an impartial party, or who puts pressure on you to make a decision immediately.
How would you respond to suspicions of fraud? The FTC suggests searching for the company or product name on Google or another search engine, and adding the terms “review,” “complaint,” or “scam.” To find out if it has received any complaints, you can also check with the state attorney general or the local consumer protection office. Also, don’t forget to file a complaint with the FTC.
Taking Social Security Too Early
The Social Security Administration permits people to begin receiving retirement benefits as early as 62, even though the majority of workers’ current full retirement age is between 66 and 67. If you can afford to wait, though, you might want to. Many seniors regret taking their Social Security benefits too soon.There is a price for doing this; your monthly payments may be reduced by up to 30%.* That’s a permanent cut in benefits, which many employees will surely find surprising as they expect their benefits will increase automatically when they reach full retirement age. Additionally, early payments may be further decreased for those who continue to work after they reach specific income limits.
It’s likely advantageous to live off your portfolio for a few years to delay claiming. Alternatively, if feasible, stay on the job longer or start a side gig to help bridge the financial gap. There are plenty of interesting ways to earn extra cash these days.
Ignoring Long-Term Care
All of us hope to continue being active and healthy well into our retirement years. A healthy diet, lots of exercise, and routine checkups with the doctor all help. However, even the healthiest retirees can become ill, and even in the absence of a major medical condition, aging will inevitably take its toll on your body and mind as you reach your 70s, 80s, and 90s. This is why it’s important that you can afford long-term care. Not being able to afford LTC is another major retirement mistake many workers make.
Long-term care policies can cover ongoing custodial care that Medicare wouldn’t. If you wait too long, however, you might not be able to obtain coverage, or the premiums might be too expensive. Long-term care funding is available, but the options are often pricey. Consider long-term care insurance, which pays for some but not necessarily all nursing home expenses, if you can afford the rates. Some retirees regret not buying long-term care insurance prior to retirement, when it may have been more affordable.
Failing to Plan How You’ll Spend Your Time
Five days a week, our jobs give our life structure; weekends are for relaxing and doing chores. On Monday morning, the cycle begins anew. But theren, once you retire, there’s suddenly a lot of time to fill. Have you given much thought to how you’ll fill your time after retirement? It’s important to budget your time during retirement just as carefully as you do your income. For example, what about getting a part-time job doing something you enjoy? Now that you have the time, you may be able to pursue casual hobbies and interests to new, higher levels.
