Seven Retirement Errors You’ll Live To Regret

Retirement is not always what’s anticipated of it. Many workers look forward to the day they’ll get to leave their jobs, go home, and never go back. Unfortunately, however, a lot of retirees regret the choices they made before quitting their jobs. As retirement approaches, there are a lot of things you need to think about. How much have you readied yourself? How much money will you really need? What about the income streams that make up your retirement nest egg, such as your IRA and 401(k)? Are you well-versed in determining when you should file for Social Security benefits? For today’s post, we’ve created a list of some of the most common retirement mistakes, and guidance on how to hopefully prevent them.

Putting Off Saving

Retirement means saying goodbye to your job and all of the paychecks, benefits, and bonuses 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 their starting saving way too late. Many people only start saving in their 40s or 50s. Many people are only now understanding that they made this retirement mistake; more than 25%* of retirees who have not saved enough put their lack of preparedness to blame.

Disregarding Inflation

It makes sense that many retirees would overlook inflation while planning for their retirement. After all, the country saw virtually no inflation for around a decade.* But as prices continue to rise, more people regret not considering how inflation might affect their retirement in the long term.

Concerns about inflation and how it may affect their retirement are shared by more than half of retirees.* Annuity sales have increased to all-time highs recently, which could be partly explained by worries about inflation. An annuity is a financial tool that can provide you with guaranteed lifetime income in the form of a series of payments (backed by the claims-paying ability of the carrier). One important benefit of an annuity is the potential to combat inflation using an optional provision called an income rider. If you’re interested in learning more about these products, reach out to us.

Moving Out On a Whim

Many retirees and pre-retirees 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, or maybe to Florida. Our suggestion? Look into the destination before making a commitment.

Moving to a completely new place without any idea of what to expect is another big retirement error. Far in advance of when you actually intend to retire, take extended trips there to familiarize yourself with the way of life. This is particularly true if you intend to retire in another country altogether, where you may find it difficult to adjust to new laws, languages, and customs.

Accepting Deals That Seem Too Good to Be True

There are no “shortcuts”: decades of planning and hard work are the cornerstones of a prosperous retirement. Nevertheless, Americans lose hundreds of millions of dollars* a year to scammers and get-rich-quick schemes. Presented with a seemingly “too good to be true” offer? They frequently come with unjustified requests for private financial data, including credit card, bank account, and Social Security numbers.

Or, you may be told you need to wire money or pay a fee before you can receive some kind of prize. This is another big red flag. Additionally, exercise caution against—in fact, run from—anyone who pushes you to make a decision right away or who tries to convince you not to seek the counsel of an unbiased third party.

How would you react in the event of fraud suspicions? The FTC advises using Google or another search engine to look for the company or product name alongside the keywords “review,” “complaint,” or “scam.” You can also inquire with the state attorney general or the local consumer protection office to see if this company has received any complaints before. Remember to register a complaint with the FTC as well.

Taking Social Security Benefits Too Soon

Although the 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 older Americans eventually regret taking Social Security payments too soon. This is because you could see as high as a 30% reduction in your monthly payments.* Many workers will undoubtedly be caught off guard by this. It’s also important to note that the reduction in benefits is permanent; your benefits will not adjust once you reach full retirement age. So, delaying claiming by living off of other income sources for a few years is recommended.

Alternatively, to help close the money gap, if possible, prolong your stay at work or take on a part-time job. These days, there are quite a few creative ways to make extra money.

Ignoring 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, can certainly help. But even the healthiest retirees can fall ill, and as you approach your 70s, 80s, and 90s, aging will unavoidably take its toll, even if you don’t have a serious medical condition. As a result, it’s crucial that you have the money to cover long-term care. This is another significant retirement mistake that many workers might make.

If you wait too long, the rates for long term care may be too high, or you may not be able to get coverage. Although there are some options to cover long-term care, they’re all fairly expensive. If you can afford the premiums, consider getting long-term care insurance, which covers some but not all of the costs associated with a nursing facility. Some retirees lament not purchasing long-term care insurance when they were younger, when it might have been less expensive.

How Will You Use Your Time?

Our jobs provide structure to our lives five days a week. The weekends are for unwinding and doing housework, and then, we start the cycle over on Monday morning. However, after you retire, you find yourself with an abundance of free time. How do you plan to spend it?

Have you thought about what you’ll do with all that free time? It’s crucial to budget your time in retirement just as you do your income. Consider taking up a part-time job 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.

*Sources: Kiplinger, U.S. News 

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