Retirement mistakes can happen to anyone. We all have our “blue sky” visions of the way retirement should be, yet our futures may unfold in ways we do not initially predict.
When I meet with clients to go over retirement strategies, we go through our plans with a fine-tooth comb.
Time and time again, I see a lot of factors that get overlooked when planning for retirement, and today, I’m diving into the biggest retirement mistakes and how you can avoid them in your retirement planning.
You may end up retiring earlier than you expect.
If you leave the workforce at “full” retirement age (FRA), which is 67 for those born in 1960 and later, you may be eligible to claim “full” Social Security benefits.
Working until 67 may be worthwhile because it will reduce your monthly Social Security benefits if you claim them between age 62 and your FRA.1
Now, do most Americans retire at 67? Not according to the annual survey from the Employee Benefit Research Institute (EBRI).
In EBRI’s 2020 Retirement Confidence Survey, 16% of pre-retirees expected to retire between ages 66-69, and 31% thought they would retire at age 70 or later.
The reality is different.
In surveying current retirees, EBRI found that only 6% had worked into their seventies. In fact, 70% percent of them had left work before age 65, and 33% had retired before age 60.2
Related: Retirement Expectations vs Retirement Reality
You may see retirement as an extension of the present rather than the future.
This is only natural, as we all live in the present – but the future will arrive.
The costs you have to shoulder later in retirement may exceed those at the start of retirement.
As you may be retired for 20 or 30 years, it is wise to take a long-term view of things.
You may have a health insurance gap.
If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost.
Looking forward, you may need extended care, and it seems to get more expensive each year. Wealthy households may be able to “self-insure” against extended care, but many other households struggle.
In Genworth’s 2020 Cost of Care Survey, the median monthly cost of a semi-private room in a nursing home is $7,738. In California, it is $9,023; in Florida, $8,803.3
Suppose you become disabled or seriously ill, and working is out of the question. How do you make ends meet?
This is such a huge oversight when it comes to retirement planning.
Addressing the potential threat of extended care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy.
To help you navigate the basics of extended care, and shed some light on what some strategies would look like, I put together a huge resource for you.
This resource is designed to help you better navigate all of the ins and outs of extended care. In the boxes below, enter in your info and we’ll send it right to your inbox.
Age may catch up to you sooner rather than later.
You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people to trust to manage your finances.
Related: The Biggest Mistakes When Estate Planning
You could be alone one day.
As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple’s income.
Keeping up a house, or even a condo, can be tough when you are elderly. Driving can be a concern. If your spouse or partner is absent, will there be someone to help you in the future?
Related: Is Downsizing in Retirement Right for You?
These are some of the blind spots that can lead us to retirement mistakes.
They may quickly affect our money and quality of life. If you age with an awareness of them, you may have the opportunity to manage the outcome better.
Between the inability to predict the future and the multiple areas that retirement planning has to cover, many families can be blind-sided when one of these factors happen.
As a fiduciary financial advisor, I’m able to take a 360-degree angle look at a financial plan to make sure that retirement planning is not only included for but done to the fullest with even the most unexpected future in mind.
If you feel you need to prepare more for the future or reexamine your existing retirement planning strategy, I’d love to set up some time to chat.
We’re happy to work with you either in person, over the phone, or virtually, based on your preference. Give our office a call and we can schedule some time together.
