Retirement is a chapter in life that we all look forward to with great anticipation. It’s the reward for decades of hard work and careful financial planning. Once you step into this phase of life, you want it to be as smooth and enjoyable as possible. To help you navigate this significant transition, we’re sharing valuable insights gathered from over 30 years of professional financial planning. In this two-part series, we’ll explore the ten common mistakes to avoid when retiring. Whether you’re just starting your retirement planning or already on the brink of this life-changing journey, these tips can make a world of difference in securing your financial future.
Table of Contents
Failing to plan
Start with the big picture strategic view first and then work our way to tactics. You can’t do great planning the other way around. Once you have the framework completed you can implement the various components of the plan.
Let’s take an example of someone collecting a pension of $100,000 per year over the past twenty year period. The purchasing power of that 100K dropped to $65,000! So, now you are 35K short of the same standard twenty years prior.
Keeping too many eggs in one basket
How many times have you heard of retirees hanging on to their old company stock only to see it all evaporate before their eyes. Consider this: From June 2001 until 2018 the company stock drops 62%! The Total Stock market index on the other hand increases by 172% during the same period.
Retiring too young
You might be able to afford to retire, but, what is your new purpose going to be after spending thirty-five years working. For some, the adjustment is seamless. But, for others, they just don’t have that something to go to everyday that keeps them energized and engaged. The grass can sometimes appear greener on the other side of the fence when it really might not be.
Underestimating social security complexities
By doing so you could leave many thousands of dollars on the table. Each year you delay receiving benefits from normal filing age, your benefit increases by 8%/yr! Another strategy is to collect spousal benefits and convert to your own benefit at age 70. The point is to explore all the possibilities early so you can make an informed decision.
As you approach retirement, it’s crucial to remember that careful planning can be the key to a comfortable and fulfilling future. Ignoring the impact of inflation, keeping too many eggs in one financial basket, retiring too early without a clear sense of purpose, and underestimating the complexities of social security can all lead to costly mistakes. By avoiding these pitfalls and taking a strategic approach to your retirement plan, you can ensure that your golden years are truly golden. Remember, retirement is not just about stopping work; it’s about crafting a new, rewarding chapter in your life. So, start planning early, seek professional guidance, and make informed decisions that will set you on the path to a secure and prosperous retirement. Stay tuned for Part 2 of our series, where we’ll delve into more retirement planning essentials.