For many workers, retirement is 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 people live to regret the decisions they made before leaving their jobs. As retirement approaches, several questions must be considered. To what extent have you prepared yourself? How much money will you really need? What about the sources of income that make up your nest egg, like your 401(k) and IRA? Do you know when to claim Social Security benefits? To help, we’ve compiled a list of some of the most common retirement mistakes and how to avoid them. Take a look and see if any of these sound familiar.
Relocating Yourself On a Whim
Many people approaching retirement find the allure of warmer climates irresistible. You may be planning to retire in Florida or one of the many retirement communities near the beach. If you ask us, though, you should take a look around before making a commitment. Another major retirement mistake is uprooting yourself and moving someplace completely new without knowing what to expect. Take long vacations to your chosen location well before your planned retirement date to become acquainted with the way of life. This is especially true if you plan to retire in another country altogether, where new languages, laws, and customs may take you by surprise.
Falling For an Offer That Looks Too Good to be True
Years of planning and hard work are essential for a successful retirement. There are no shortcuts. Still, get-rich-quick schemes and other scams cost Americans hundreds of millions of dollars* each year, and elder fraud is rampant. Have you received an offer that seems “too good to be true”? They frequently request sensitive financial information, such as Social Security numbers, bank accounts, and credit card numbers. You may also be told you need to wire money or pay a fee before receiving a prize of some kind. Furthermore, question (or just turn and run from) anyone who encourages you not to seek advice from an impartial party, or especially anyone who puts pressure on you to make a decision right away.
How would you handle suspicions of fraud? The FTC recommends searching for the company or product name on Google or another search engine, along with the terms “review,” “complaint,” or “scam.” Or, to find out if they’ve received any complaints before, contact the state attorney general or the local consumer protection office. Also, remember to file a complaint with the FTC.
Taking Social Security Payments Too Early
The Social Security Administration allows people to start receiving retirement benefits as early as age 62, despite the fact that the majority of workers’ current full retirement age is between 66 and 67. However, if you can afford to wait, you may want to.
Many seniors eventually regret taking their Social Security benefits too early. This is because your monthly payments could be reduced by up to 30%.* And, to clarify, that’s a permanent reduction in benefits. Furthermore, early payments may be reduced for those who continue to work after reaching certain income levels. So, it’s probably a good idea to live off your portfolio for a few years to avoid claiming. Alternatively, if possible, stay on the job for longer or start a side job to help bridge the financial gap. There are many interesting ways to make extra money these days.
Forgetting About Long-Term Care
All of us hope to remain active and healthy well into our retirement. A healthy diet, plenty of exercise, and regular medical checkups all help. Even the healthiest retirees can become ill, however, and even if you don’t have a major medical condition, aging will eventually take its toll on your mind and body. This is why it’s critical that you can afford to cover long-term care. Being unable to is another common retirement mistake.
If you wait too long, you may be unable to obtain LTC coverage, or the premiums will be prohibitively expensive. Options to fund long-term care are available, but are consistently expensive. If you can afford the premiums, look into long-term care insurance, which covers some but not all nursing home expenses. Some retirees regret not purchasing long-term care insurance before retirement, when it could have been more affordable.
Ignoring The Impact Of Inflation
It’s understandable that many retirees might overlook inflation when developing a retirement strategy. After all, the country experienced almost no inflation for nearly ten years. However, as prices rise, more people regret not paying closer attention to how rising costs may affect their retirement.
Over half of retirees* express concern about inflation and its potential impact on their retirement. In fact, annuity sales have reached all-time highs in recent years, which may be due in part to inflation concerns. An annuity is a product that can provide you with guaranteed lifetime income (backed by the claims-paying ability of the issuing insurance company), typically in the form of a series of regular payments. One advantage offered by an annuity is the ability to offset inflation through an optional feature called an income rider. Are you interested in purchasing one of these products? Contact us to learn more.
Putting Off Retirement Saving
Retirement entails saying goodbye to employment and, therefore, your paychecks and all associated bonuses and benefits. As a result, many retirees come to realize they should have saved more. Many people don’t even start to think about saving until they reach their 40s or 50s. This is one of the biggest retirement mistakes people make, and one that many people are only now realizing; more than 25%* of retirees who haven’t saved enough say it was because they didn’t have the foresight to start far enough in advance.
How Will You Spend Your Time in Retirement?
Our jobs provide structure to our lives five days a week; weekends are reserved for downtime and household chores. On Monday morning, the cycle begins anew. However, once you retire, you will suddenly have a lot more time to fill. Have you given much thought to how you will spend your time after retirement? It’s critical to budget your time in retirement just as carefully as you do your money. For example, consider getting a part-time job doing something you enjoy. Now that you have more time, you may be able to take your casual hobbies and interests to new heights.
