Retirement Mistakes and How to Fix Them
Retirement is a time in life that every working person looks forward to. Not only will it be a new period in which you no longer have to set your alarm on a daily basis, but it will be a time to relax as much as you want and a time to finally – fully – get to enjoy your passions. That said, none of us will get to a financially healthy retirement if we don’t properly prepare. There are many retirement mistakes that people make when planning, and you don’t want to find out that you’ve misjudged when it is too late. Here are a few common retirement mistakes and how to fix them.
Retiring Too Early
After decades of working, it is natural to want to jump the gun a bit and retire early. After all, you’ve probably been daydreaming about it for years. That said, retiring early is a mistake that can be unbelievably costly in the long-run.
Most people who have been working full-time fall into one of three retirement categories: those that will receive Social Security, those that will receive railroad retirement benefits, and those who will be receiving a pension. (Some people will receive more than one.) If you are part of a union, there will be a list of rules, regulations, and information about what you will receive upon retirement and what ages these different steps may fall under. Be sure to consult those rules for your age information.
If you have been paying into Social Security or have a spouse that has, you will be looking to those payments upon retirement. According to the National Academy of Social Insurance, you may start taking the full benefit of Social Security at 66 years and 2 months, but this will gradually rise to 67 for those born in 1960 or later.
If you plan to retire a few years earlier than your benefits would suggest or require, you will be missing out on several years worth of savings and growth that could have continued if you had waited. Not only that, but you will be digging into your funds earlier, as well as potentially incurring penalties for withdrawing funds too early. Prevent all of this by planning to work until the retirement age dictated by your retirement plan.
Forgetting About Healthcare
Once you leave your job, you will be left without the insurance that you may have had for years. Many people often forget this fact and it can completely throw them off course. Be sure to factor the costs of healthcare into your retirement planning, because healthcare will remain just as important at an older age, if not more so.
Many people will also qualify for Medicare. While this will take care of many expenses, you may want to consider having an insurance supplement to take care of further healthcare costs. Remember, you need to take into account doctors, hospital stays, surgeries, emergencies, medication, tests, and other medical expenses that you may not even know about, so be sure to plan for further insurance coverage after retirement.
Not Participating in Your Company’s Retirement Plan
Many employers offer retirement plans, but people forget or choose not to take advantage of them. Some people are very young when they start at a company, don’t take retirement seriously or don’t have enough to make ends meet and never get around to registering. Whether you fall into any of these categories or were just intimidated by the idea, these are the funds that could make or break your retirement. And regardless of the reason, the fix is easy.
Fill out the paperwork now and have a human resources rep help you handle it from there. If you are lucky, many companies will even match your contribution to something like a 401K. That means that what you contribute will end up being twice as much invested. If you find yourself in this position, be sure to contribute at least the minimum to qualify for the matching program. When you’re ready for retirement, it’ll be very hard to argue with the free money that came from your company.
Starting Your Funding Too Late
There are people in their 40s and 50s who haven’t yet started planning for their retirement. It is never too late to start, but try not to wait too long. The sooner you start, the more money you’ll have for the rest of your life – the part of your life where you get to enjoy the things you once dreamed about. Where things like going on a cruise or taking art classes are activities you can more readily sign up for. Whether you are in your 20s, 30s, 40s, 50s or 60s, start planning for retirement today, don’t delay. The only one who will be missing out is you.
Once you are in retirement, set a budget for yourself. Have an idea of what your monthly expenses are, as well as how much you would like to have on-hand for activities and adventures. Whether you can put aside hundreds of dollars a month or just a few, every little bit counts. Do what you can now in order to set yourself up for your golden years and avoid all the retirement mistakes that you can.