Retirement: The day workers can quit their jobs, go home, and never look back. But retirement doesn’t always go as planned, and a lot of seniors wish they hadn’t made the choices they did before they left their jobs. As retirement gets closer, there are a few things that need to be thought about. How well have you prepped yourself? How much money do you really need? Your 401(k) and IRA are two sources of income that make up your nest egg. What about them? Are you sure you know when to start taking Social Security? We’ve put together a list of some of the worst retirement mistakes people make and how to hopefully avoid them. Take a look and see if any of these sound like you:
Not Putting Away Enough Money for Retirement
When you retire, you give up your job and all the benefits, bonuses, and wages that come with it. Many people find out after retiring that they should have saved more. This often happens because they start saving too late. A lot of people don’t start saving until they are in their 40s or 50s. It’s too late for many people to avoid this retirement mistake; over 25%* of those who haven’t saved enough say it’s because they weren’t ready.
Disregarding Inflation
It’s easy to see why many people might forget to take inflation into account when they make their strategy. After all, there wasn’t much inflation in the country for almost ten years.* But as prices go up, more people regret that they didn’t pay more attention to how rising costs might affect them.
More than half* of retirees are worried about inflation and how it might affect their retirement. In fact, sales of annuities have hit all-time highs in the past few years. This may be partly because people are worried about inflation. An annuity is a type of financial product that can offer you guaranteed income for life, backed by the claims-paying ability of the carrier. One good thing about annuities is that they can help you counter inflation with an optional feature called an income rider. Are you interested in an annuity as an option? Get in touch with us to learn more.
Moving On A Whim
Many people who are getting close to retirement can’t resist the allure of warmer climates. For retirement, you might want to go to Florida or one of the many retirement communities near the beach. What do we suggest? Before making your choice, take a look around. Another big retirement mistake is to uproot yourself and move somewhere new without knowing what it’ll be like. Take long trips to the place you want to retire long before you actually retire to get used to the way of life there. This is especially important if you want to retire abroad and might find it hard to deal with the different languages, laws, and customs.
Falling For Offers That Seem Too Good to be True
Planning ahead and hard work are the keys to a successful retirement. There are no shortcuts. Still, get-rich-quick schemes and other scams cost Americans hundreds of millions of dollars every year. Have you been offered a deal that looks “too good to be true”? They often ask for private financial information like Social Security numbers, bank account and credit card numbers without a good reason. Or, before you can get a supposed prize, you could be asked to wire money or pay a fee. Also, be wary of—in fact, run away from—anyone who tells you not to get advice from a third party or who pressures you to make a decision immidiately.
If you suspect you’re being conned, what do you do? The FTC says to use Google or another search engine to look up the name of the business or product and add the words “review,” “complaint,” or “scam.” You can also call the state attorney general or the local consumer protection office to find out if the business has been sued before. Don’t forget to file a report to the FTC about it either.
Starting Social Security Too Early
While most workers’ full retirement age is between 66 and 67, the Social Security Administration lets people start taking retirement payments as early as 62. That being said, you might want to wait if you can. A lot of older people regret taking their Social Security payments too soon. There is a major drawback to this: your monthly payments could go down by up to 30%. Many workers will also be shocked to learn that their benefits will go down permanently; it’s a misconception some have that their benefits will automatically go up when they reach full retirement age. Also, people who continue working, assuming they hit a certain income limit, may see their benefits cut even more.
To put off claiming, it might be best to live off your investments for a few years. You could also stay at your job longer or get a side job to help pay the bills if you can. These days, there are lots of options to make extra money.
Forgetting About long-term care
Every one of us wants to stay healthy and busy well into our old age. Eating well, working out a lot, and seeing the doctor regularly are all things that can help. That being said, even the healthiest retirees can get sick, and as you get older, your body and mind will start to feel it. This is especially true in your 70s, 80s, and 90s. That’s why it’s important to be able to pay for long-term care. Not being able to pay for LTC is another big retirement mistake that many workers make.
Long-term care can pay for ongoing nursing home care that Medicare wouldn’t be able to. But if you wait too long, you might not be able to get LTC or the rates might be too high. There are methods to fund long-term care, but they’re usually very expensive. Long-term care insurance may help pay for some nursing home costs, if you can afford the rates. Some retirees wish they had purchased long-term care insurance before they retired, when it might have been cheaper.
Not Planning For How You’ll Spend Your Time
Our jobs give our lives structure five days a week. On the weekends, we rest and do chores. Then, the cycle starts over on Monday morning. When you retire, though, you have a lot more time on your hands. Have you given much thought to what you’ll do in retirement? The same way you should budget your money, you should also budget your time. Like, how about getting a part-time job doing something you’re passionate about? Now that you have more time, you might be able to take your casual interests and hobbies to new levels.
