These days, planning for retirement isn’t just a luxury. It’s a necessity. Retirement has become too complex to just pick a day to stop showing up for work. You have to factor in savings, expenses, taxes, and other spending. And above all, you must avoid making some of the most common mistakes that could derail your retirement. To help, here are the Five Common Retirement Mistakes that pre-retirees make.
1. Not Maximizing Social Security
Social Security is a guaranteed stream of income, something no one should neglect. But many people don’t do all they can to maximize their benefits, meaning they’re denying themselves money in retirement. The inflation adjusted income provided by Social Security makes it one of your most significant retirement assets. In addition, the timing of when to file for benefits could mean a difference of $120k plus in benefits. To learn more, download the complimentary booklet, “Understanding Social Security”, from the our website.
2. Not Planning for Health Care Expenses
Chances are, your medical expenses will increase after retirement, something many people forget to consider. For example, have you thought about how the possibility of a long-term car event could affect your finances? If you haven’t, the good news is that you can save for and even minimize those costs by planning ahead.
3. Misusing Tax-Deferred Assets
Tax-deferred investments like traditional IRAs and 401(k)s are a great way to save for retirement, but many people plunder them long before they retire. This can lead to both fewer savings and penalties. Don’t raid the cookie jar!.
4. Improper Asset Allocation
By spreading your investments across different asset classes, you potentially take on less risk. That’s because if one class drops in value, the others can compensate. Unfortunately, many pre-retirees don’t have a proper allocation, meaning they’re putting all their eggs in one basket.
5. No Retirement Plan at All
Many people never take time to determine what they want in retirement – or how to achieve it. Failing to plan is planning to fail. Don’t waste another minute. Start dreaming what you want retirement to be, then call us for help in actually doing it!
Avoiding the Five Common Retirement Mistakes
As with many things, planning ahead and deciding earlier rather than later is usually the best course of action. When it comes to retirement, it’s possible to save thousands of future dollars simply by planning ahead. Remember to avoid the five common retirement mistakes listed above, and seek the help of your Financial Advisor with any questions you may have.