You deserve peace of mind in retirement, which could last 20+ years. Here are five common mistakes to avoid so you can stay on track toward your retirement goals
- Overspending: When you retire, you might have more free time and flexibility, making it easier to spend too much, especially in the early retirement years. Be mindful of your expenses, especially if you’re adjusting to a new lifestyle with more events, home renovations, expensive hobbies, or travel. Create separate budgets for essential needs and lifestyle spending to stay financially secure.
- Miscalculating Inflation: Even low levels of inflation (1-2%) can erode your purchasing power over time, affecting your retirement income. Work with a financial advisor to create an investment and income strategy that accounts for inflation, like investing in stocks with a history of dividend growth.
- Underestimating Medical Expenses: While Medicare is valuable, it doesn’t cover all healthcare costs. Prepare for deductibles, copayments, dental, vision, hearing, and long-term care expenses with guidance from your financial advisor.
- Undervaluing Social Security Benefits: When to file for Social Security matters. Filing too early can reduce your monthly benefits for life. Consult with a financial advisor to determine the right filing strategy based on your unique situation, tax rates, health, and income sources.
- Retiring Too Soon: The age you choose to retire affects your income and expenses. Early retirement may result in lower Social Security benefits and requires more assets to cover expenses, account for inflation, and pay for healthcare before Medicare eligibility. Work with a financial advisor to plan for a secure financial future, considering your retirement timeline and goals. You can use a Retirement Planning calculator for an initial assessment.
These mistakes can impact your financial stability in retirement, so it’s essential to plan wisely and seek professional guidance for a secure and comfortable retirement.
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