6 Retirement Mistakes To Avoid
by; Jeremy Reif, CRPS
Are you approaching retirement or already enjoying your golden years? It’s crucial to manage your finances wisely. Here are some common mistakes retirees make that you should avoid.
Mistake 1:
Not having a budget. That is unless you have endless amounts of money. Without a budget, it’s easy to overspend and run into financial trouble. Take control of your expenses by creating a budget and sticking to it. Sometimes it is best to set up your retirement account distributions once a month, two weeks apart from when Social Security comes. This way, you get paid every two weeks and can feel more like you were working.
Mistake 2:
Ignoring your healthcare costs. Medical expenses can be a major burden in retirement. Don’t forget to factor in costs like health insurance premiums, prescriptions, and potential long-term care. Long-term care is very often forgotten or ignored because of the cost associated with it. From a financial advisor’s perspective, this single-handedly can ruin retirement for not only the person in need of long-term care but also the spouse who is in good health. Plan and protect your financial health.
Mistake 3:
Relying solely on Social Security. While Social Security is an essential part of retirement income, it shouldn’t be your only source. Diversify your investments, explore retirement accounts, and seek professional advice to maximize your retirement income.
Mistake 4:
Failing to account for inflation. Inflation can erode the purchasing power of your savings, especially over an extended retirement. This is why we sometimes see elderly people driving around in older vehicles. Sometimes they can’t afford to upgrade. Consider investments that can provide a hedge against inflation to sustain your lifestyle.
Mistake 5:
Taking on too much risk. As you get older, it’s crucial to manage risk carefully. Don’t put all your eggs in one basket. Balance your investment portfolio and ensure you have a diversified mix that aligns with your risk tolerance and time horizon. The most important part is to have a distribution strategy.
Mistake 6:
Neglecting estate planning. Many retirees overlook estate planning, but it’s important to have a comprehensive plan in place. This includes a will, power of attorney, and healthcare directives. Protect your assets and ensure your wishes are carried out.
Avoiding these common mistakes can help you achieve financial security during retirement. Take control of your finances and make informed decisions to enjoy your golden years stress-free.