Retirement mistakes that cost you dearly
Retirement planning is a process that should be started as early as possible. Hiring or consulting a financial planner is often a good idea, because a professional can help you avoid certain costly mistakes.
Since you have decades to plan for retirement, you have enough time to prevent certain mistakes that may cost you dearly down the road.
Here are some of the most common retirement mistakes that are fortunately avoidable.
Retirement mistake #1: Underestimating your retirement needs
Many people wrongly assume that they will need much less during retirement than they did during their working years. Although experts suggest that you need around 80% of your preretirement income to live comfortably during retirement, you need to consider your personal situation. Reassess your retirement plan regularly to be able to make the necessary adjustments sooner rather than later.
Retirement mistake #2: Overspending in the first years of retirement
Another big mistake that cuts into your retirement savings is overspending in the first few years of retirement. You may want to enjoy yourself during retirement, but don’t forget that you can run out of savings if you’re not careful with your spending. Taking expensive trips, eating out often, and high lifestyle costs can diminish your retirement savings in only a few years.
Retirement mistake #3: Forgetting about the higher health costs in retirement
When you’re still young and healthy, you tend to forget that retirement comes with increased medical care costs. You are much more prone to require medical assistance and special care after retirement, so don’t overlook this aspect when planning for retirement. Medicare costs are on the increase, so it’s better to be safe than sorry and save more towards health care than originally planned.
Retirement mistake #4: Not saving enough
How much should you save for retirement? That is a question that only you can answer. You need to calculate the amount based on your current income, lifestyle and needs. But one thing is for sure: you’re more likely to save less than you should. If you don’t get started in your 20’s or 30’s, you will have to play catch up on your retirement savings. The later you start saving, the more difficult it will be, because you’ll have to catch up and save a much higher amount.
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