Who doesn’t look forward to their “Golden Years”? We can’t wait to be free of the shackles of work and finally relax and enjoy our life! Well, unless you are extremely wealthy and have numerous sources of income that will continue flowing even after your retirement, you need to take the time to plan carefully for those “Golden Years” and avoid some of the most common mistakes before retirement.
Mistake #1: No Retirement Plan
Often people get caught up in the daily struggle for survival (work, kids and paying the bills) and forget that at some point they will reach the age of retirement. Unfortunately, retirement is one of those “one-time” things which we can’t “do-over.” So, if you are not well-prepared for that milestone, you could be facing hardships you only thought happened to those who didn’t work hard enough during their working life.
Whether you are at the beginning of your working life or just around the corner from retirement, you need to have a solid and realistic retirement plan. Not planning for your retirement is one of the most serious mistakes before retirement anyone can make. If you are expecting to get through retirement on your social security benefits, you’ll most likely wish you’ve never retired. Retirement planning is quite complex and if you are not a professional financial advisor then you should consult one as soon as possible – it can be the best investment you have ever made.
A financial advisor has the knowledge and experience to evaluate all the details of your current financial situation and help you establish a realistic plan to help you enjoy your retirement.
Mistake #2: In A Hurry To Retire
Another of the most common mistakes before retirement people can make is being in a hurry to retire. If you can work past that predetermined age of retirement, you certainly should continue working and reinforce your retirement income as much as possible. This is especially relevant to individuals with a family history of longevity. Research has found that one of the factors determining our life-span is our DNA. So, if you think you might live to a ripe old age, then you need to work as long as you can.
According to reports published by the Stanford Center on Longevity, postponing retirement makes good financial sense, because of significant gains in your retirement income, especially now that interest rates are extremely low. These reports also highlight the fact that postponing retirement can also be good for our physical and mental health as well.
The Social Security Benefits Planner estimates that for each year you postpone from age 67 to 70, you’ll receive an additional 8% in your monthly benefit. Please, keep in mind that after age 70, there’s no further bonus for delaying. Moreover, we need to keep in mind that Social Security data indicates that at least one member of a 65-year-old couple can expect to live an additional 23 years, to age 88 and one-third of all retirees will live to age 92. This means that their retirement savings will have to cover 27 non-working years!
Mistake #3: Not Saving Enough
Unfortunately, research conducted by the Stanford Center on Longevity found that many people close to retirement age today have not saved enough money for their retirement. The research states that less than half of workers take advantage of employer-sponsored savings plans and only 40% have an IRA. What’s more, about 33% of workers in 2008 had an overall savings of less than $10,000.
This usually occurs because people tend to underestimate their retirement costs and believe that their social benefits will be enough for them to live on. People assume that when they retire, they won’t need as much money to live on since their expenses should be significantly lower!
However, they don’t take into account that during retirement, they will have more time to take part in some of their favorite activities, such as travel, golf, fishing or even going out with friends/family, which can take a big bite out of their annual budget (if they took the time to create one!). What’s more, it’s an unfortunate fact of life but there is also a greater possibility that our medical costs may increase and that we may need assistance for chores around the house.
It’s Never Too Late To Start Preparing For Retirement
People can make mistakes and miss opportunities to save or prepare for their retirement. But it’s never too late to start preparing. Planning, as already mentioned, is quite complex and there is a considerable amount of factors which must be taken into account. Seeking the advice of a professional retirement planning advisor could be one of the wisest decisions we make. Also, start saving NOW! Pay yourself the moment you get that paycheck and invest the money in your retirement fund. If you are able, get a part-time job and set that money aside for your retirement. And of course, start minimizing your expenses, even minor ones!
For more information about retirement planning, please use our online contact form or call us at (888) 671-7891 today. Our team of advisors will work with you to develop a customized financial plan specific to your personal goals!
Securities and financial planning offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Multop Financial is not affiliated with LPL Financial, and offers tax and accounting services separate and apart from LPL Financial.