Three Common Retirement Mistakes
Experience can be a painful teacher. I know I’ve made many mistakes throughout my life that have been more painful to learn from than others. Most people prefer to avoid learning painful lessons through retirement mistakes, so I put this article together.
There are three common mistakes I’ve seen people make when it comes to retirement and retirement planning.
- Rosy Picture Outlook
- The Flipside
- Forgetting to Plan for Important Essentials
I hope that by bringing these retirement mistakes to your attention and discussing them, I can help you avoid them.
Rosy Picture Outlook
What do I mean by “rosy picture”? It is viewing your retirement planning assuming everything will work out perfectly or for the better. However, failing to plan for possible scenarios can be dangerous when it comes to retirement planning.
Hopefully, your retirement works out exactly as planned, but unfortunately, that doesn’t always happen. It’s prudent to prepare for a variety of outcomes.
Good investment returns are always the goal, but what happens if you have a bad investment return? What if your health doesn’t turn out as expected, or something happens to your spouse?
The reality is that there are things completely out of your control, such as markets and economies. Having too rosy a picture can be detrimental and can set you up for failure in retirement.
The Flipside
I’ve also met people who are the opposite of the rosy picture. These people make the retirement mistake of being too worried or nervous about all sorts of things. They become too conservative in their projections and don’t want to spend any money at all.
They hold on to every penny because they think, “What happens if the sky falls? What happens if this or that happens?” I understand there are things that can worry you. We just talked about a few. The key is to plan and think about these things within reason.
You want to make progress in your retirement. Make appropriate plans, but do not let yourself become too anxious, worried, or conservative in your approach. At the end of the day, you still want to live a full life filled with purpose when you retire.
Forgetting to Plan for Important Essentials
Sometimes, you can have an excellent plan for your day-to-day expenses in retirement but forget to plan for other important essentials. I see this retirement mistake commonly in the areas of taxes and health care.
Taxes
Taxes are not an optional expense. Considering how you handle your taxes and how the tax code affects your retirement income is essential. Are your decisions putting you in a higher or lower tax bracket? Knowing your tax burden will help you plan accordingly.
Health Care
Healthcare costs can be expensive. There are several variables, including:
- The type of plan
- Where you live
- Your income
People sometimes don’t want to think about aging, but it’s critical to plan for it. While it’s impossible to know exactly, estimating healthcare costs and planning for aging are vital to retirement planning.
Update Your Retirement Plan
Now that you know a few common retirement mistakes, talk with your financial team to see if there are any areas that you need to address. Ensure you don’t make these mistakes and retire with confidence.
Important Information
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