Don’t Make These Retirement Mistakes

Most of the people that retire at 65 can expect to spend about 20 years in retirement, however about one quarter of them will reach the age of 90 and about 10% will make it past age 95. Those numbers add up to a lot of time spent in retirement. If you want to live comfortably in retirement, no matter how many years you live after you punch that clock for the final time, financial experts say you should avoid these retirement blunders.

  1. 1.       Not having a plan for retirement money. It is important to plan what you will do with your retirement money. How much will be used toward paying bills and everyday expenses, etc. Experts say this is the biggest blunder that most retirees make. To avoid this create a cash flow scenario. This will show you how much money you will need for everyday living and how long it will last.
  2. 2.       Forgetting about inflation when planning. Another mistake is forgetting that the dollar today will not be the same dollar twenty years from now. Inflation can erode the money you have saved by not giving you enough purchasing power. Retiree should put this into their cash flow scenario when determining what to invest for retirement.
  3. 3.       Failing to save enough money. There really is not much more to say. You can’t compensate for what you don’t save. It is better to save more than you think you will need, then not enough.
  4. 4.       Raiding retirement accounts early. Many retirement accounts will allow you to take a loan against the account balance, but in reality, this is just taking away from what you have worked hard to save. That money needs to stay in that account to accumulate interest that compounds annually. You could be losing out on tens of thousands of dollars by pulling money from the account early.
  5. 5.       Poor investment behavior. Over the course of 30 years, the market is bound to take a down turn. It is important to pick reliable stocks and mutual funds to help grow your investments. Don’t stock jump, and remember it is all in the timing. This can also be said for the opposite. If you are too conservative in your investments, then you may not make enough money over the 30-year period.
  6. 6.       Missing out on employer’s 401(k) match. It is estimated that American workers miss out on $24 billion per year in matching funds for their 401(k)s. This money is what employers would be depositing into retirement accounts if the workers would have made their own contributions. You are missing out on free money.
  7. 7.       Letting all money be taxable. Take advantage of retirement accounts that allow your money to be tax free later in life. Roth accounts is taxable, but grows to be tax-free. Explore account opportunities that may cost you more up front, but allow you to enjoy the benefit later.
  8. 8.       Underestimating health care expenses. People don’t always plan for the “What ifs” life can throw your way. Medical care can be one of the ‘what ifs’ frequently overlooked. Review the Medicare options and make sure you have enough money to cover any gaps.
  9. 9.       Filing for Social Security too early. You can begin to withdrawal social security as 62, but if you leave it until the full retirement age of 66 you can maximize the money in your social security. The government gives retirees an extra 8% for every year they leave their benefits unclaimed, up to age 70. Married retirees can coordinate spousal benefits to maximize their social security.