As we grow older in the workforce, we expect to retire at some point. Even though we know retirement is inevitable, planning for it is not as easy as it seems. For instance, you will typically ask yourself questions regarding where to save your money or how much to save monthly. It is crucial to ponder over these questions before you retire. Once you retire, it is too late to ask these questions. Since there is no time machine for you to go back in time and do things differently, it is best if we highlight common regrets people have once they retire. By highlighting these common regrets, you can plan for retirement and avoid falling victim to any of these regrets. Without further ado, below are ten things people often regret about retirement.
10. Accumulating Debt
Although some people take debts to pay for basic needs, most people take loans to spend on items they do not need. People in the workforce typically take loans since they know they can pay off the debts with their salary. However, if you do not control your appetite for debts, you may retire with huge debts. As a result, you will have to use some of your retirement savings to clear your debts. To avoid such a situation, clear off any debts you may have before retiring.
9. Underestimating Medical Costs
If you hardly fall sick, you may assume you will remain healthy during retirement. As a result, you may not put any money aside for healthcare. However, medical care is very expensive for senior citizens if they get sick. According to Registered Nursing, the average cost of healthcare for a person over 65 years old is $11,300. If you do not save enough, you will quickly deplete your savings on medical care alone. To avoid such a case, consider getting long-term care insurance the earliest you can.
8. Retiring Too Early
Early retirement seems like a good idea since you will have plenty of time to do what you want. According to Yahoo, some people have been able to retire at thirty years. However, to retire at such an age, you need to be disciplined when using your savings. If not, you may have nothing to use in your 60s. So, if you are dead set on early retirement, ensure you have saved enough.
7. Shying Away From Investing
Lack of a stable income may be an understandable reason for not investing, but not when you have a stable income. One of the reasons people do not invest is because of loss aversion. Most people tend to think that investing is all about stock markets. However, there are other non-risky ways of investing, like life insurance, for instance. When you retire, you will not struggle with the basics since you can spend what you earned from your investments.
6. Claiming Social Security Too Early
Some people will immediately claim social security as soon as they retire. You can begin claiming it when you are 62, but it pays to wait until you are 67. When you collect it at 62 years old, you will not get the full benefits since you will only be given about 30% lower than the expected amount. By getting a low amount, there is a chance you could quickly deplete it.
5. Not Retiring Early Enough
Earlier, we noted a drawback of retiring too early. On the flip side, there is a danger of retiring late. People may retire late because they are passionate about working or have no retirement savings. Retirement should be the time to explore activities you couldn’t do while working. So, it would be best if you were open to doing other things besides work.
4. Not Planning for Your Spouse’s Death
Although a bitter pill to swallow, you have to accept that you may outlive your spouse. The moment you accept the possibility of such an event, you will begin to make plans by taking up life insurance, for instance. However, if your spouse passed on and you did not have some form of savings, you may deplete the little you have on funeral arrangements.
3. Not Thinking About the Activities That They Would Do in Retirement
Most people look forward to retirement because they can finally rest for long periods. However, there is more to life than just resting. At some point, you will grow bored, and you will eventually think of activities you can do. It is hard to think of what to do when you are retired. So before you retire, you can have a bucket list of activities that you hope to do. As soon as you retire, you will refer to the list you wrote of activities.
2. Not Diversifying Their Method of Saving Money
Most workers are enrolled in a traditional 401(k) plan through their employer. In this retirement scheme, the worker contributes a certain percentage of their earnings. Upon withdrawing their contributions, they will pay some taxes on them. To survive retirement, you should not put all your eggs in one basket. As good as this plan is, you should also ensure you have other monies saved in other areas, such as Roth IRA and high-yield savings accounts.
1. Not Consulting a Financial Advisor Earlier
Not everyone understands what it entails to manage their money. In such an instance, hiring a financial advisor may be a good idea. You can either hire a one-time financial advisor or a full-time advisor. Some people do not hire financial advisors because they deem hiring them a waste of money. Though it will seem like a lot of money to hire them, you will have huge savings after listening to them.
Saving during retirement is difficult since you no longer earn a stable income. To avoid having any of these regrets, you need to plan for it as soon as you start working. If you do not plan accordingly, you will be reduced to a beggar. It is not uncommon for parents to ask their children for money after retirement. However, you cannot mooch much from the kids since they have families to care for. So, for a smooth retirement, ponder over the ten tips.