For many workers, retirement represents an ultimate goal: the day they can quit their job, 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 draws closer, there are a few things that need to be thought about. But make sure you know what you’re doing long, long before you retire. How well have you prepared? How much money do you really need? 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 avoid them. Check to see if any of these sound like you:
Not Saving Enough Money for Retirement
When you retire, you give up your job and all the benefits, bonuses, and income that comes with it. Many people find out too late that they should have saved more because of this. This often happens because they didn’t start thinking about saving until it was too late. A lot of people don’t start saving until they’re in their 40s or 50s. Along with starting to save too late, some retirees don’t think about other aspects of their strategy, either. Over 25%* of those who haven’t saved enough say it’s because they weren’t ready.
Forgetting About Inflation
It’s easy to see why many people might forget to plan for inflation when they create their retirement strategy. After all, inflation wasn’t very relevant in this country for almost ten years. But as prices have recently gone up, more people are starting to regret not paying more attention to how rising prices might affect their golden years.
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,* and this may be partly because so many people are worried about inflation. An annuity is a type of financial product that can provide you with guaranteed income for life, backed by the claims-paying ability of the carrier. This income can come in the form of a string of payments or a single lump sum. One important benefit of annuities is that they can help you counter inflation with a feature called an income rider. Interested? Get in touch with us to find out more.
Moving On Short Notice
Many people who are getting close to retirement can’t resist the allure of moving to someplace nicer with a warmer climate. For your retirement, you might want to go to Florida or one of the many retirement towns near the beach. What do we suggest? Before making a choice, take a look around. Another big retirement mistake some people make is moving themselves somewhere new without knowing what it’ll be like. Take long trips to the place you want to move to a long time before you actually retire, so you can 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 Look “Too Good to be True”
Decades of strategizing and hard work are the keys to a successful retirement. There is no “shortcut.” Still, get-rich-quick schemes and other scams cost Americans hundreds of millions of dollars every year, especially older Americans. Have you been presented with a deal that looks “too good to be true”? It probably is.
Scammers often ask for private financial information like Social Security numbers, bank account and credit card numbers without a valid reason. Or, they claim that before you can receive some kind of reward, you first need to wire money or pay a fee. Also, be wary of—in fact, turn and run from—anyone who tells you not to get advice from a third party or who makes you feel like you have very limited time to make a decision.
If you suspect that you’re the target of fraud, what should you do? The FTC recommends using 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 complain with the FTC about it, either.
Starting Social Security Too Early
While most workers’ full retirement age is currently between 66 and 67, the Social Security Administration lets people start taking retirement payments as early as age 62. That being said, you might want to wait if you can. A lot of retirees now regret taking their Social Security payments too soon. It comes with a major drawback: 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, as they might have thought they would go up automatically once they reached full retirement age. Also, individuals who keep working after they hit certain income limits may see their payments cut even more.
To put off claiming, it might be best to live off of other income sources 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 a lot of ways out there to make extra money.
Forgetting About Long-Term Care
We all want to stay healthy and active well into our old age. Eating well, working out, 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, it’ll start to take a toll on your body and mind, especially into 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 help pay for ongoing nursing home care, whereas Medicare wouldn’t. But if you wait too long, insurance might be unavailable or the rates might be too high. There are ways to cover long-term care, but they’re all usually very expensive. Long-term care insurance may help cover at least some of the costs. If you can afford the rates, you might want to look into it. Some retirees wish they had bought long-term care insurance before they retired, when it might have been cheaper.
Failing to Plan For How You’ll Spend Your Time
Our jobs give our lives structure for five days a week. On the weekends, we have some downtime and do chores, and then the cycle starts over on Monday morning. When you leave, though, you have a lot more time to do things. Have you given much thought to what you’ll do then? In the same way you should budget your money, you should also budget your time after your retire. Figure out how you’ll be spending it: for example, how about getting a part-time job doing something you love? Now that you have more time, you might be able to take your casual interests and hobbies to a whole new level.