Retirement is a time for people to sit back, relax and enjoy life. Sadly, many men and women find they are unable to enjoy their golden years as they don’t have the money to do so properly. Certain mistakes are made again and again when people are planning for retirement. The following are some of the most common mistakes and how to avoid them so you can spend your final years enjoying life to the fullest.
Retirement frees up time for men and women, many who have spent decades at a job with little time for their preferred activities. When they finally have free time, they go out and spend money on things they want. Sadly, people don’t realize how much they have gone overboard until a year or two has passed and they have financial issues. Don’t let this happen. Establish a budget and adhere to it at all times. Although this means some things may need to be delayed or avoided completely, financial security needs to be the priority at this time. Learn more from Commerce Trust Company about how to avoid this common problem by saving more for retirement when you are young.
Although it would be nice to downsize or move to an area where you have always wanted to live once you retire, make certain this is the right time to make a move. Property taxes could lead to a smaller home actually costing more in the long run, or a person might find they don’t have access to good medical care in their new location and must travel to obtain the same level of care they have been receiving. This can quickly eat up any savings achieved by moving to a new area or to a smaller home in a more rural location. Spend time researching a new area before relocating to ensure none of these problems will arise once your retirement plan is in place.
Review Your Financial Picture
Criminals often take advantage of the elderly. Don’t let a scammer take your hard-earned money. Sadly, however, they aren’t the only ones who take advantage of a person as he or she gets older. For example, is there really the need to keep a multi-million dollar life insurance policy now that the children are grown and gone? Many men and women find they can get rid of services they no longer need and have more money for the things they enjoy by examining their budget carefully and eliminating those items that are no longer useful.
Some people are very hesitant to put their money in the stock market, as they worry they will lose their retirement funds with a bad investment. Others invest aggressively, convinced every stock they buy is a sure winner. Every investment portfolio needs to have a good mix of assets. When one declines in value, another may increase and balance out the negative with a positive. Work with a financial advisor to find the right mix of investments based on your desired level of risk, your current age, your retirement goals and more.
People live longer now thanks in part to advancing medical care. As a result, more men and women are finding they need long-term care and they have not accounted for the expense of this type of care in their retirement plan. Speak to a financial advisor to determine how to prepare for the future regardless of what happens and whether insurance should be obtained to help cover the costs of this type of care if it is needed in the future. Some people will find an insurance plan to be of great help in paying for care that lasts for weeks, months or years. Others, in contrast, may find they should drop this type of coverage from their portfolio as they are advancing in age and the amount of care needed won’t be as extensive. It all depends on the person and his or her current situation.
Underestimating Medical Care Expenses
A person cannot know what the future holds, especially when it comes to his or her health. Medicare only covers certain expenses, and the individual must pay the remaining amount. Don’t fall short in this area and do without necessary medical care as a result. It’s always best to overestimate expenses in this category and hope they aren’t incurred. Sadly, Medicare costs continue to rise and many people don’t account for this either. In fact, certain experts estimate a married couple will spend $240,000 during their retirement years on medical care alone. Make certain you are prepared for this as you plan for the future.
Retiring Too Early
At this time, a person may retire at 62 and start collecting social security. However, doing so is a mistake. A person collects more if he or she waits to collect the funds. In fact, a person may defer collecting on their social security until they turn 70 and will receive more money each month as a result of holding off on receiving the monthly check. To determine when the best time to begin taking social security, a person needs to know their full retirement age. This is based on the year in which they were born. For example, a person born in 1937 reaches full retirement age at 65. On the other hand, a person born in 1967 doesn’t reach full retirement age until he or she turns 67. By taking social security before full retirement age is reached, a person might find their benefits are reduced by as much as 30 percent. For this reason alone, it is best to hold off on accepting these funds as long as possible, past full retirement age if possible.
Retirement planning is an ongoing process. A person cannot plan for the future and simply walk away thinking the hard work has been done. Anytime a person’s circumstances change, the plan needs to be reviewed to determine if changes should be made. For this reason, every person should find an advisor they feel comfortable working with, as this person becomes of great help in alerting clients when something changes that could affect their plan. Find this person today, so you know you are covered no matter what happens in the coming days, weeks, months and years.