Retirement planning is a tricky process, one that requires careful planning and patience. But even if you have a retirement plan with a clear set of financial and lifestyle goals, it’s important to be aware of several common missteps that many fall victim to.
1 - Underestimating the costs of health care
As health care costs continue to rise dramatically, employers are shifting more weight of the costs onto their employees. More companies are beginning to drop retired workers from their health plans, and millions of Americans have no form of coverage at all.
Consequently, a common mistake made in retirement is a lack of preparation for the financial impact of health expenditures. One of the most overlooked and most expensive costs is long-term health care, which can be devastating to your financial goals. Long-term care insurance can provide some safeguards, and purchasing it early on can help lower its costs.
2 - Misjudging how long you or your spouse will live
Many underestimate the amount of assets that could be needed to last throughout their lifetimes. As medical technology improves and life expectancy increases, the odds are good that you or your spouse will live past age 90. So, it’s vital that you are prepared to live longer.
3 - Presuming you’ll work a long time
Your generation is famous for working long, hard hours to get ahead, and most baby boomers believe that they’ll be working long into retirement. But that assumption can be one of the biggest retirement mistakes you make.
Census Bureau statistics indicate the average age of retirement in America is now 63. According to the 2019 Retirement Confidence Survey by Greenwald & Associates and the Employee Benefit Research Institute, just 13 percent of workers expect to retire before age 60, but 38 percent of retirees report retiring that early. Nineteen percent of workers plan to retire between 60 and 64; 33 percent of retirees retired in that age range. Even if you want to work as long as you can, it may not always be possible because of circumstances such as poor health or disability, so it’s vital that you plan and save for such a scenario.
Working with a financial professional and having the proper planning in place are essential keys to a successful retirement. It’s also important to keep an eye on health care costs and stay informed on issues that will affect your retirement. By focusing on the long term and being aware of common pitfalls, you can be prepared to make your retirement the best years of your life.