Home Retirement Biggest Retirement Mistakes Retirees Must Avoid

Retirement

Biggest Retirement Mistakes Retirees Must Avoid

Trista Smith November 24, 2021

It is more critical during retirement than ever to ensure that you have a healthy amount of savings. After all, the definition of retirement is that you are no longer working, and you need to live on your investments and social security benefits.

According to The Motley Fool, studies have shown that one out of three Americans only has $5,000 in retirement savings, and 21% have absolutely nothing. That is a significant portion of the US population that is hoping to only live on their benefits. If you want to prevent yourself from becoming part of that statistic, read on to see the 46 biggest financial mistakes most retirees make.

46. Not Planning For Your Free Time

Many people look forward to retiring, as it gives them the chance to take on so many things they never got to do. However, with a sudden increase in free time, many people go stir crazy. Most seniors end up going back to work, albeit part-time, because they don’t know what else to do with their time. Your free time should be as budgeted as well as your finances to prevent this from happening.

Consider taking up a few community college courses at a discounted price to learn a new skillset. That keeps your interests versatile, your mind sharp, and you’ll have unique skills even to start a new retirement job to keep income flowing into your household. Look around in your local area to see what options are available to you and which ones are the most affordable. There’s no reason you have to become one with your couch just because you’re not working anymore.

NEXT >>

45. Switching Jobs Too Often

Although the economy has been difficult, mainly regarding gaining employment, many people don’t realize that they might leave behind a good chunk of change when they look for a new job. Before considering retirement, people should look at their employers’ contributions to their 401(k)s and stock options available while working for that company. Employees don’t have any ownership until they’ve been employed with the company for a certain period.

However, leaving early to choose a new career means that these options are left behind, leaving them with less money they could have put into their retirement funds for the future. Do some research on the vesting situations before you leave your job and consider whether quitting is worth it in the end. You may have to force yourself to remain a bit longer so that you can reap the rewards before you leave.

<< Previous

NEXT >>

44. Not Planning Properly for Taxes

There are two options available to you before you retire. There’s the Roth 401(k)/Roth IRA and the traditional 401(k). Not many people are aware of the difference, but it’s vital that you do. Both options are dependent on where you think you’ll fall in the tax bracket after you retire. If you believe that you’ll end up in a higher tax bracket, then the Roth IRA is better for your needs. That means that you will pay all of your taxes at the front end so that any withdrawals that you make are entirely tax-free.

However, if you think that you’ll be in a lower tax bracket, then the traditional 401(k) is a better option. It does mean that you’ll have to pay taxes on each withdrawal from your 401(k), but you won’t have to pay the high front-end rates at the beginning. A financial advisor may be the best person to help you figure out which option works best for you before you retire. Keep reading to learn more about retirement mistakes you should avoid as you age.

<< Previous

NEXT >>

43. Failing to Sign Up for Medicare Properly

Medicare is a great way to help you pay for those medical issues you may develop in your senior years. However, many people miss out on this great benefit because they’re not aware of a deadline. Eligible seniors must sign up for Medicare within seven months of retiring or leaving their employment. Missing this deadline means that they won’t have any medical coverage or be forced to pay a 10% late fee for enrollment.

Once they’ve signed up for Medicare, they neglect to remember Medicare Part D, which deals with prescription drug benefits. Instead, they allow their plans to continue on autopilot, forgetting to make changes to them that could end up saving them much money. That means that they end up paying for parts of their plans that they’re not even using. Through re-examination, they can see which parts no longer apply to them to save money each year by playing for what they need.

<< Previous

NEXT >>

42. Paying for Storage

Over the years, we tend to become burdened with things that we don’t have space for. That can include things we’ve inherited from our parents that they inherited from their parents. All of these belongings can snowball together to create a collection of things you just don’t have room for. Moreover, that’s where people start renting storage units to keep it all. Nevertheless, instead of hoarding everything, it may be time to downsize so that your wallet suffers a little less.

Instead of paying storage fees for items that you’re not using, consider getting rid of them in some way or another that helps to lighten the financial burden on you. You could donate items, sell them, or simply throw away the things that no longer have value. It will take a lot of time and patience to empty a storage unit, but your future retirement funds will thank you after all of that hard work.

<< Previous

NEXT >>

41. Giving Up Because You Started Too Late

If you’ve started saving too late, it doesn’t mean that you should give up saving altogether. Any effort to plan for the future is better than nothing. Pick yourself up and take the steps you need to prepare for a more financially-responsible future. The first thing you can do is to take advantage of any catch-up contributions policies your retirement account may have. That allows people over fifty to contribute additional sums of money into their IRA to make up the difference they’ve been slacking on over the years.

Living more frugally is also a great way to pick up the pace on your savings. It isn’t to say that you should give up all of your worldly possessions, but there are essential steps you can take to saving more money each month. Furthermore, with those savings, put a percentage of it into your retirement account. It may not seem like much, but over time, the numbers will start to add up. Don’t give you. There are still things you can do to help you save for your retirement years – it’s not too late.

<< Previous

NEXT >>

Make sure you move your investments from high-risk to secure ones. Credit: Shutterstock

40. Making Risky Investments

If you have the entrepreneurial spirit, it is all too easy to make risky investments in your 20s and 30s. Sometimes, these risks pay off in a big way. When they are done correctly, they will be able to help you make a lot of money. However, the closer you get to retirement, the more detrimental a failed risk may be to your livelihood. Instead of putting your money into high-risk pursuits, you may want to consider having secure Investments once you get older.

For example, instead of putting your money into a brand new startup that needs an angel investor, you may want to start putting your money into mutual funds that are guaranteed to pay you interest every year. Many people can live off of the interest from a mutual fund. That is so long as you save during the course of your lifetime. The secret to finding a good angel investor is to have a set list of the kind of investor you’re looking for. Consider investors with some experience in the fields you’re interested in and don’t forget to ask around. You’ll only find the best investors through networking.

<< Previous

NEXT >>

Always look for property tax discounts for seniors. Credit: Shutterstock

39. Not Taking Advantage Of Property Tax Discounts

In certain jurisdictions, if a house is owned by someone who is of full retirement age, they will make an exception to lower the property tax amount. Alternatively, you could potentially get a tax freeze to guarantee that your property tax will never get any higher than it currently is. That is vital for people in retirement because you don’t want your taxes to suddenly become so high that you can no longer afford to pay for it with your Social Security.

It’s better to consider these options sooner rather than later so that you can make the most out of the money you’ve been saving. Make sure you talk to your state and local municipality and have an assessor come in to lower your property tax where applicable. For example, in New York, senior citizens are eligible to save 50% on their property taxes after the age of 65. That can mean saving thousands of dollars over the year and for every year after that. What’s the point of keeping all of that money if you can’t enjoy any of it when you retire?

<< Previous

NEXT >>

Make sure not to withdrawal your Social Security too soon. Credit: Shutterstock

38. Withdrawing Social Security Too Early

The longer you wait to take out your Social Security, the better. In the United States, people are allowed to take out their social security at age 62. However, they will only receive 75% of what they usually would because they are receiving it early. If they are patient enough to wait until they are “full retirement age,” which is 66 years old, they will get the maximum amount of benefits. That makes waiting for that much more worth it.

However, in the advent that you can’t wait, there are some steps you can take to live comfortably. You should live under budget, invest a little of your money into fruitful ventures, and meet regularly with your financial advisor to ensure you’re on the right track. Retiring early isn’t an option to blow all of the money you have in one go and then have nothing to live off of for years to come. For more information on how all of this works, check out the Social Security Administration’s guide to retirement age.

<< Previous

NEXT >>

Be careful not to withdrawal from your ROTH IRA too soon. Credit: Shutterstock

37. Withdrawing Your Roth IRA Too Soon

A Roth IRA is one of the greatest ways to save for retirement because of the magic of compound interest. Compound interest is interest gained from the initial principal, including any interest that has been gained during previous periods. Look for a compound interest that uses more frequent compounding periods for you to accrue the most gain. With this established, your compound interest should start to snowball over time, growing exponentially with each compounding period.

However, if you withdraw your money too soon, you may end up paying much higher taxes than if you waited. That is because taxes are focused on how much you have, not how much you’re going to have in the future. It can put a drain on your resources. The minimum wage required for someone to take money from their Roth IRA without penalty is age 59 and a half. If you want to know more about distributions and how withdrawals work, check out this in-depth guide by H&R Block.

<< Previous

NEXT >>

Be careful before you move spur-of-the-moment during retirement. Credit: Shutterstock

36. A Spur-Of-The-Moment Move

There are loads of articles on the Internet that will convince couples to become ex-pats during their retirement. These statistics, talking about how much cheaper it is to live in another country, are enough for some people to pack their bags and get on a plane. However, couples realize too late that this country’s laws and regulations are more than what they bargained for. That can leave them in a pickle for several reasons.

One, they also may not be able to speak the language; that makes it more difficult for them to enjoy retirement daily. Many people become sad that they are far away from their grandchildren and family support as they grow older. So before you move to another state or country for a dramatic lifestyle change, make sure that you plan everything out. Remember to look 20, 30, 40 years into the future because you never know how long you will live.

<< Previous

NEXT >>

You may be able to refinance your mortgage using the FMERR program. Credit: Shutterstock

35. Ignoring the FMERR Program

As you get closer to retirement age, you may or may not owe money on your mortgage. The Freddie Mac Enhanced Relief Refinance Program (FMERR for short) allows people to refinance their mortgage if they have little-to-no equity. Leading up to the 2008 financial crisis, homes ballooned prices, and people applied for mortgages left and right. Now, many of those homes have lost value, which means the homeowner gets no equity by no fault of their own. If you are in this situation, seriously read up on FMERR, which will help ease your worries going forward.

One of the essential elements of FMERR is to provide relief to those who owe more on their homes than they are worth. However, the relief is only offered to those making payments on their mortgage and making them on time. This relief is especially beneficial to senior citizens who retired, as they’d put a lot of money into improving their homes, only for their values to drop. Keep reading for more tips on how you can save for your retirement. It’s easier to avoid these mistakes if you are aware of them ahead of time.

<< Previous

NEXT >>

Sadly, many retirees are targets of online scams. Credit: Shutterstock

34. Falling For An Online Scam

Unfortunately, the elderly are one of the biggest targets of scams nowadays. That is mostly because technology is changing faster than they can adapt to it. Scammers find newer and faster ways to take seniors’ money right from under their noses, whether it’s scams involving their computers or insurance for their cars. According to the FTC, older adults account for a large portion of the victims of scams. That is for many reasons. It may be that older adults are not as technologically savvy. Alternatively, it may be that they feel lonely, and they’re willing to talk to someone who calls them on the phone or send them a friend request on Facebook.

Sadly a lot of these people end up losing thousands of dollars and having their lives completely ruined. Before you fall for a scam, please check out the FTC’s guide to protecting older consumers from seeing what these scam artists are doing to attack retirees. Also, be aware of phone numbers that you don’t recognize. The majority of scammers using robocalling – using a computer to make phone calls – to rope people into their scams. It’s better to let the phone ring; if it’s a real person, they will leave you a voicemail. Scam calls never leave full voicemail messages.

<< Previous

NEXT >>

Some people try to live a lavish retirement even if they cannot afford it. Credit: Shutterstock

33. Continuing A Lavish Lifestyle

During your career, you may have gotten used to a luxurious lifestyle. You should be proud of it, too; it’s a reflection of all the hard work you put in to get to where you are. If you were making a six-figure salary, you might have been the type of person to go on expensive vacations, have a boat, or a fancy sports car. However, when you retire, you are living on the savings that you had throughout your career. Even with the help of a social security check, the amount of money is very modest.

That means that you may not be able to live as lavishly as you once thought. Since this money needs to last you the rest of your life, you will likely no longer be able to live the same lifestyle you did when you were working. It is always a good idea to be more frugal as you get older, instead of less. Accidents also happen, and you want to be able to afford those unexpected hospital expenses if they ever come up.

<< Previous

NEXT >>

Some people choose to work for the rest of their lives. Credit: Shutterstock

32. Planning To Work Forever

After the 2008 recession, more and more people decided that they simply would never retire. That’s because they want to continue working, either because they need to save up more money or they legitimately enjoy their work. Sadly, in most cases, people have no choice but to continue working because they would not afford their living expenses otherwise. However, no one can truly live forever. Imagine being a hundred years old, still working at your desk job.

Instead of telling yourself that you will simply work for the rest of your life, try to plan an escape for your retirement. You never know when there may be a health crisis that forces you to stop working. This “escape plan” may mean downsizing to an apartment, selling your house, or moving to a cheaper area. Even if it means you have to start clipping coupons to save a few extra dollars on your groceries, take whatever steps you can to cut costs. You’ll feel more rewarded for it.

<< Previous

NEXT >>

When you retire, you should try to use coupons to help save money. Credit: Shutterstock

31. Never Using Coupons

When people are young, they roll their eyes at the thought of using a coupon at the store. They consider the practice ridiculous because it eats up a lot of time, both at home and pulling them out of your purse at the store. Do you think that it is embarrassing and a waste of time? However, when people get older and wiser, they usually realize that coupons are incredible. They’re pretty much given out for free if you know where to look for them.

It will be more important than ever to make sure that you can stretch your money for as long as humanly possible during your retirement. So it is essential that you begin using coupons. It can help you save tons of money, and if you play your cards right, you can get items for free. If you have never done couponing before, check out TheKrazyCouponLady.com. You may be surprised at just how much you could end up saving at the store.

<< Previous

NEXT >>

This older couple is super jazzed about their senior discounts. Credit: Shutterstock

30. Not Taking Advantage of Senior Discounts

Many restaurants, movie theaters, and entertainment venues will give seniors a discounted price. You just have to know where to look. However, in many cases, you will never know about the discount unless you ask. You may also want to sign up for AARP, which gives you a list of various institutions that will give you discounts for being above a certain age. Think of it as a reward for all the money you’ve spent and earned throughout your life.

AARP gives plenty of discounts to those that travel too: deals on hotels, car rentals, and even specific entertainment packages. You can even use AARP at the local movie theater to save money on tickets and snacks. Many people will decide to begin going to these places to eat or have their entertainment based on the senior discount. We hope that by changing this lifestyle, you will save tons of money over time.

<< Previous

NEXT >>

Timeshares are popular in Orlando, Florida, because of Disney World. Credit: Shutterstock

29. Buying a Timeshare

When people retire, they start to think about going on vacations with their grandkids. Since you’ve been saving money all your life, you may be tempted to invest that money into something like a timeshare. In case you are not aware, a timeshare is owning a small portion of a property where you are only allowed to go there at certain times of the year. For example, Disney has a timeshare program where you can “own” a part of an apartment, but you were only allowed to go there maybe one week out of the entire summer.

Some people say that timeshare is a fantastic way to have a vacation and have a more comfortable experience in a vacation spot. However, plenty of other people are also burned financially by the timeshare system, especially if you do not go to that location every summer. Before you jump into something like this, make sure you do your research beforehand. Also, be aware that a timeshare means that you share the space with someone else, and they might not always be agreeable about your schedule or cleaning up after themselves.

<< Previous

NEXT >>

You should always try to match your employer’s maximum contribution. Credit: Shutterstock

28. Not Matching Your Employer’s 401K Benefits

Suppose you are giving the minimum amount of a 401k distribution from your paycheck, even when your employer is willing to match it dollar-for-dollar. In that case, that is literally like throwing away free money. According to the Motley Fool, there is $24 billion in unclaimed 401k matching just left on the table in The United States, simply because people do not elect to match their employer’s contributions. So it’s time to step up your game and make higher contributions.

Consider taking more frugal steps with your daily life to match the amount your employer is putting in. That will give you a honeypot of money to look forward to in the future when you do eventually retire. Carpool, purchase cheaper groceries, and learn to cut coupons. You’ll be thankful to your past self when you have a comfortable sum of money to rely on. Keep reading for more things you should avoid going into retirement.

<< Previous

NEXT >>

It is best not to spoil your adult children for too long. Credit: Shutterstock

27. Babying Adult Children

Parents will always see their children as their babies, and they truly will always love them. After the recession in 2008, more adults are living with their parents for longer than ever before. However, they grow up someday, and there’s a certain point in life where they need to take responsibility for their own lives, no matter what the economy is like. Unfortunately, there are some parents out there that continue to coddle their adult children far longer than necessary.

If you continue this type of lifestyle, there is a good chance that your children may drag you down and use all of your hard-earned money. Ensure that you establish certain boundaries with your adult children to let them know that it is not okay for them to continue to take money from you beyond a certain age. Treat them like tenants if you have to: make them pay rent and contribute to the general household. They can purchase their own groceries, and you’ll have an extra hand to help you around the house when you need it.

<< Previous

NEXT >>

Taking from your 401K is like stealing from your older self. Credit: Shutterstock

26. Borrowing From Your 401K

If you have a full-time salary job, chances are your employer allows you to make deposits into your 401k. According to The Motley Fool, 29% of Americans admit to withdrawing from their 401K early. However, if you take that money out before you reach retirement age, this can cause many issues, many of them extremely costly. First of all, you have to pay taxes on that money, and the taxes could end up being more than you earn.

Secondly, it takes away from the potential compound interest that you could be earning over several years. As stated earlier, compound interest snowballs over time, but if there’s less principle, then there’s less interest being built up. Taking out of your 401k should be an absolute last resort if you want to retire comfortably. Think about it this way: Taking from your 401K when you are young is like stealing from your older self. So you are only hurting yourself by doing it.

<< Previous

NEXT >>

A reverse mortgage can put your property at risk. Credit: Shutterstock

25. Taking Out a Reverse Mortgage

There are loads of commercials on TV that advertise reverse mortgages. They write these scripts to make it sound like a great idea, as it is a form of income. However, it could seriously put your largest asset at risk. A reverse mortgage puts a lien against the title of your house in exchange for a loan on the equity of your property. It’s taking out another mortgage on your house, and there is nothing “reverse” about it because it’s not earning you any money. Reverse mortgages put you in deeper debt.

In most cases, retiring people will not have the money ever to pay that loan back since they have no new ways of earning money. Then these debts will start to pile over time and, with less money to work with, they’ll become financially unable to pay them off in time. That means that you may be in danger of losing your home someday, or it will guarantee that you can never pass it on to your children. If you want to find out more about how reverse mortgages work, check out this guide on Investopedia.

<< Previous

NEXT >>

The sooner you start saving for retirement, the better. Credit: Shutterstock

24. Avoiding Saving Until The Last Minute

If you are already nearing retirement age, this advice may be too little too late unless you have the miracle of a time machine. However, if you are lucky enough to be planning, you really should be saving starting in your 20’s. If you get a Roth IRA in your 20’s or even when you’re 30 years old, you can begin saving the maximum amount, and you may retire as a millionaire. That may sound too good to be true, but it is the power of compound interest.

On top of that, if you put that money into an account, that will generate interest. Then you could live on that for the rest of your life. Waiting until the last minute and believing that your Social Security will be enough to carry you is a guarantee that you will struggle through retirement. Furthermore, what would have been the point of all that working if you have to spend your retirement years taking on a new career, just trying to make ends meet?

<< Previous

NEXT >>

You may not be able to go out every weekend anymore once you retire. Credit: Shutterstock

23. Trying To Maintain Your Working Lifestyle

Many people get used to a certain lifestyle when they’re working. It may be spending $10 on lunch every day and going out to eat multiple times a week. It could also involve buying new clothes every two weeks or going out to drinks with friends. This lifestyle of spending frivolously weekly usually needs to stop once you reach retirement age. That’s because you won’t have much money to spend as you did when you were working. Moreover, with no other source of income, what else can you do?

Once you are nearing retirement, try to transition your lifestyle into a more modest way of life. For example, instead of going out to eat for your lunch break, try to bring a bag lunch. Alternatively, adopt shopping at thrift stores instead of expensive retail stores to save on some money. Small changes can genuinely add up to a lot of money over time, and you’ll be more thankful for it afterward.

<< Previous

NEXT >>

It’s good to organize, but don’t go overboard. Credit: Shutterstock

22. Extreme Decluttering

Some people subscribe to the belief that you should truly downsize everything about your life when you retire. With shows like Tidying Up With Marie Kondo on Netflix, more and more people aim towards minimalism. There is nothing wrong with that, and downsizing can truly help many people live more fulfilled lives at any age. However, there reaches a certain point when decluttering can go too far. You don’t want to get rid of everything, after all, since there are some important things you’ll need to keep around as you get older.

Ensure that you are not getting rid of things that may come in handy later or something that holds sentimental value to you. As you get older, you will have far less money to replace the things you get rid of. So think long and hard before your purge everything you own. If you’re having trouble figuring out what to keep, consider asking your close family members or even your adult children whether they would like any of the things you have that may have sentimental value.

<< Previous

NEXT >>

Sometimes, working full-time can cost more than retiring. Credit: Shutterstock

21. Collecting Social Security and Still Working Full-Time

Believe it or not, working through retirement could mean that you are missing out on free money. Some people do not realize that if you try to collect social security, there is a limit to how much money you can make before you begin losing money out of your benefits. At age 62, there is an annual limit of $17,040. So for every $2 you earn above that amount, you lose $1. After age 65, you lose $1 for every $3 earned, and the annual limit becomes $45,360.

Eventually, after you reach the full retirement age of 66, there is no longer a limit to how much money you can earn. That is the best time to sell your assets or earn additional income by finding a new job. It may be time to consider that passionate job you’ve been yearning for when you were much younger. Now you have all the time in the world to explore your other talents and creativity. No time like the present, right?

<< Previous

NEXT >>

Some retirees end up hoarding things they do not actually need. Credit: Shutterstock

20. Hoarding

Have you ever heard of the term hoarding? Or maybe somebody called you a hoarder. We already talked about the dangers of decluttering too much, but it may be more common that retirees tend to hoard. That was especially true for people born in the 1920s and 30s and who experienced the Great Depression. Unfortunately for those of us who were adults during the 2008 recession, we are likely to have the same sort of feelings about holding onto things “just in case.”

However, this mindset that we need to hold onto every little thing usually triggers hoarding to happen. You need to find a balance between hoarding and extreme minimalism. When you are going through your stuff, ask yourself if you truly need it. Furthermore, if you feel that it may come in handy someday, ask yourself how much it would cost to repurchase it if you needed to replace it. More often than not, these items that we feel such an attachment to are $5 or less, and you really can get rid of them. The odds are that you may get rid of 20 items worth $5 or less, and if you mistakenly need to buy one out of those 20 things again, it’s genuinely not a big deal.

<< Previous

NEXT >>

It is better for retirees to live in a single-story home. Credit: Shutterstock

19. Buying a Two-Story Home

There are a lot of people that have a two-story house when they are raising a family. However, once it is time to retire when the kids are grown up, it may be a good idea for you to transition to a one-story house. If you have never experienced an injury in your legs or hips before, then you truly don’t know how difficult and impossible it is to go up and down the stairs to use the bathroom, kitchen, and other necessities to get on with your life. That is especially true if you live alone or with just a partner.

As you get older, seriously consider getting a one-story home that will be injury and arthritis-friendly. It’s also a good idea to consider adding more rugs to your home to reduce the chances of slipping. Good wooden or tiled floors look quite nice, but they are serious slip hazards that seniors can have difficulty with as their mobility starts to deteriorate.

<< Previous

NEXT >>

Don’t spoil your grandchildren to the extreme. Credit: Shutterstock

18. Spoiling Your Grandkids

We can’t help but love our children. Moreover, with age and wisdom, grandchildren receive arguably even more love than their parents did. However, there reaches a certain point when grandchildren truly can be too spoiled. Even though we love grandchildren and want to give them everything you have, make sure that you are taking care of yourself. You also want to make sure that these children grow up with a certain sense of responsibility for their own finances.

Instead of spoiling your grandchildren with material things, consider blessing them with your knowledge of life instead. Show them what it means to be responsible for providing them with some life lessons. Share stories of your own life that demonstrates what it means to work hard and be fiscally responsible. Depending on your grandchildren’s ages, they might not get it right away, but they’ll treasure whatever knowledge you provide them and apply it in the future when they’re much older.

<< Previous

NEXT >>

A huge number of people never sit down to figure out a retirement budget. Credit: Shutterstock

17. Forgetting To Make A Retirement Budget

According to The Motley Fool, 46% of Americans are just guessing a ballpark number of what they need for retirement. Unfortunately, this is one of the biggest mistakes that most people make. A shockingly large number of people never actually sit down and figure out how much money they can live on every year of their retirement based on their savings. For example, if you only have $100,000 saved for retirement, divide that by ten years, and that’s still only $10,000 a year.

If you retire at age 65, this means that you’re only giving yourself $10,000 a year for the next ten years of your life, and if you live to be older than 75, you are doing yourself a disservice. Unfortunately, suppose you do not do this math to figure this out ahead of time. In that case, people will run out of money very quickly and have to rely solely on their social security benefits. That’s not a good position because it means you don’t have much room to work with when planning financially.

<< Previous

NEXT >>

You should always plan for long term health care. Credit: Shutterstock

16. Avoiding Long-Term Medical Care Planning

If you have been lucky enough to have a relatively healthy life, you may not overthink about future medical care. As you get older, it is more important than ever to have health insurance. It is also important to have friends and family who can help you if you need a ride to medical appointments or anything along those lines. In many cases, if people are not planning for these things ahead of time, they may end up living in a retirement facility.

Retirement facilities are fine and good, but they’re not the best place to be if your plans entailed retiring as an independent person. The state of your medical care is also left up to those running the facility. It also deals with visiting hours in place, so you’ll see even less of your family. Try to make a plan before it’s too late and let your family know what your intentions are. If you never thought of that before, keep reading to avoid important retirement mistakes.

<< Previous

NEXT >>

It is always important to write your last will and testament before it’s too late. Credit: Shutterstock

15. Not Writing A Will

Some people have a mindset that they will live for a very long time, and therefore, they put off writing their will. While it is good to be optimistic, we still need to be realistic that anything can happen at any moment. After all, people die in car accidents every day at any age. You never know what might happen. Furthermore, without a will, all of your material possessions are left to probate. That means that everything you possess is left up to the state to decide.

They will pick a personal representative to determine who gets what from your estate. That hardly sounds like the best plan if you intended for certain possessions to go to specific people. Make sure that you write your last will and testament long before it is time for you to pass away. You can always adjust the will later if you change your mind, so don’t worry about that. It is just a lot more important to make sure that after you pass away, your assets will be split up the way you want them to be.

<< Previous

NEXT >>

Make sure you get life insurance before it is too late. Credit: Shutterstock

14. Waiting Too Long To Buy Life Insurance

In the United States, 40% of people do not have life insurance, and 80% of people assume it is more expensive than it is. The older you are when you sign up for life insurance, the more expensive it will become. Unfortunately, if you wait until the last minute to get life insurance, your loved ones may not be last with anything at all. Ensure that you sign up for a life insurance plan when you are still healthy enough to qualify for lower premiums.

However, it’s not a good idea to go out and buy the first insurance policy you come across. It takes a lot of research to find a provider who cares about your needs. Consider what you want to get out of a policy and what is covered, then find a provider that meets your needs. Also, find a provider who has a flexible payment system so that you can budget adequately every month to afford the payments.

<< Previous

NEXT >>

Hobbies like sailing can help ease any boredom you might feel during retirement. Credit: Shutterstock

13. Not Planning A New Hobby

One of the biggest problems that retirees face is boredom. That happens a lot to people who are workaholics. If they don’t have many hobbies outside of work, they don’t know what to do with themselves once everything is over. There is a statistic that after people retire, they died soon afterward. According to OSU, people who continued working past age 65 lived 11% longer than everyone else, regardless of pre-existing health conditions.

Some people theorize that it is because of boredom and a sense of purpose in life. It is imperative to feel that you have something to live for. That does not necessarily mean that you need to keep working forever. Make sure you plan for a new hobby, whether it’s golf, sailing, knitting, sewing, or anything that brings you joy.

<< Previous

NEXT >>

It is possible to invest too much into retirement. Credit: Shutterstock

12. Investing Too Aggressively

Investing is a great thing to do. However, there reaches a point when some people go too far. You should save for retirement, but you also need to remember that it’s okay to live your life too. If you invest in something like a Roth IRA, there is a cap for how much you can invest for good reason. You should not be putting everything you make into your retirement because you do not know how long you have to live. Instead of aggressively investing, try to put aside a comfortable percentage of your income every month.

You also don’t want to put all of your eggs in one basket, as they say. Diversify your investment options so that you still have a fallback plan to minimize your losses if the unfortunate happens. It would be best to speak to a financial advisor to see what you should be investing in and for how much. However, don’t spread yourself too thin either; having too many investments can lead to confusion and losing track of where you’ve tucked all your money away.

<< Previous

NEXT >>

Many seniors decide to downsize as they get older. Credit: Shutterstock

11. Refusing To Downsize

There are many benefits to downsizing your home when you are ready to retire. First of all, is it is just you and your partner living together you do not need a huge house. Getting a small home that is a one-story building is great for many reasons. First of all, it is less to clean. Secondly, if you have arthritis or any other types of injuries that may occur, you can get to everything you need on just one floor.

Some people refuse to downsize because they feel as though they deserve to have a large house for the rest of their life. If you can afford to do this and still get the help you need, go for it. However, in most cases, people do much better going into their old age by downsizing to a smaller home. Consider putting aside the need to flaunt what you have and living a more modest life in a modest home. You should be making your life easier, after all.

<< Previous

NEXT >>

Many people need a retirement job to help keep them financially stable. Credit: Shutterstock

10. Refusing To Get a Part-Time Job

Some people hate their job so much they cannot wait to get out as soon as possible. They swear that they will be much happier when they are not working. However, this eagerness to get out of work can cause issues in multiple ways. We already mentioned on this list that withdrawing your Social Security early means that you are getting less money in the long run. It also May mean that you will struggle financially.

Instead of deciding to quit working once you hit age 62 completely, consider getting a part-time job that you would enjoy. Part of retirement is embracing the things that bring you joy and incorporating them into your life. Try to find a second career in your “dream” field, even if it’s just a minimum wage income. Having a part-time job will also keep your brain and body active, helping you to stave off those medical conditions that come with a lack of social stimulation. You’ll keep your mind sharper while still doing what you love.

<< Previous

NEXT >>

There are loads of opportunities for senior citizens to get free entertainment. Credit: Shutterstock

9. Not Going to Free Senior Events

Everyone should get out and have some fun, no matter what age you are. In almost every town in the United States, there are opportunities for older adults to get free entertainment. It may be concerts in the park during the spring and summer months. You may also find free events at local community and senior centers. You’ll never be aware of them if you don’t look, and one of the easiest places to find events is the good old Internet.

A quick search of events in your local zipcode will bring up a plethora of results, many of them you may never have heard of before. Check out your local town’s website too, and consider visiting the municipal building to ask if there are any opportunities in your local area. Even if you don’t find what you’re looking for, there’s nothing wrong with inquiring about volunteering. Giving back to your community is a great way to keep it strong, and people will look to you as a beacon of responsibility, charity, and good will.

<< Previous

NEXT >>

Having debt during your retirement is incredibly stressful. Credit: Shutterstock

8. Still Having Debt

Having debt is difficult at any age. Nevertheless, it becomes exponentially more difficult as we get older. If you are reaching retirement age and you still are holding debt on your mortgage or credit cards, it is time to consider alternatives. You may want to refinance your loans or dump as much money as you possibly can and become debt-free. In some cases, you may want to consider working for an additional year or two just so that you can retire debt-free.

It becomes so much more difficult to survive during retirement when you are trying to pay off debt. Social Security is barely enough to keep you alive when it comes to renting, taxes, and everything else that you need to pay for. So it is best to have as few bills as humanly possible. Consider discussing with your spouse whether you need two cars and sell one to avoid continuing to make payments on it. Alternatively, reduce your cellphone bill by switching to a cheaper plan that provides you with only what you need.

<< Previous

NEXT >>

Some people are afraid of investing in the stock market. Credit: Shutterstock

7. Avoiding The Stock Market

Following the stock market can be tricky. However, instead of staying in the dark, take some time to learn about the stock market. Having a healthy stock portfolio can give you a huge boost in your retirement savings. However, for many people, the stock market seems intimidating. Some people imagine that you have to be a mathematical genius to understand how it all works. In reality, it is not as hard as you would think. And if you truly do hate math, you can hire a broker or financial advisor.

They can provide you with the best advice you need to make the smartest stock investment decisions. You can also take the easy route by using your phone. There are also plenty of apps out there like Robin Hood that make it easy for you to invest in stocks with just a few clicks on your smartphone. If you are interested in getting started, do some research on Investopedia to get started in the stock market.

<< Previous

NEXT >>

Don’t put all of your eggs in one basket. Credit: Shutterstock

6. Putting All Of Your (Investment) Eggs In One Basket

Many people make the mistake of putting all of their eggs in one basket. It is a recipe for disaster, as in one fell swoop, you could end up losing everything. For an investment portfolio to be healthy, it needs to be diversified, which means spreading your investments around. That is important because if one of your investments goes down in value, others may be going up so that it continues to balance things out.

However, if you invest in just one thing, you are putting yourself in danger of losing it all. Look at what happens to the people during the financial crisis in 2008. Many of those people who lost everything did so because they put all their eggs in one basket. That left them with nothing to fall back on, and many of them ended up losing their homes. Before you put all of your money into your favorite stock, make sure you do your research on the marketplace and any business you invest in.

<< Previous

NEXT >>

Loads of people get a luxury car during their retirement. Credit: Shutterstock

5. Buying A New Luxury Car

Who doesn’t want a brand new luxury car to cruise around town in with your friends — or even solo? Whenever you see an expensive luxury car on the street, chances are that an older man is driving it. That is because many retirees feel that they deserve to get a luxury car. After all, they worked for decades saving up their money. Now they want to live the life that they’ve always dreamed of. However, a luxury car will dramatically decrease in value as soon as you drive it off the lot.

The cost of repairs for luxury vehicles is also significantly higher than any other type of car. A car is just there to help you get from point A to point B. It doesn’t have to have a fancy luxury car name for it to be a good vehicle. Before you run out and buy your dream car, try to make a budget to see how expensive it indeed will be for you to maintain it. Your retirement savings may not be enough to justify the splurge.

<< Previous

NEXT >>

It’s best to stop all of your old habits once you get older. Credit: Shutterstock

4. Continuing Bad Habits

You don’t need a doctor to tell you that it’s unhealthy to smoke and drink. However, there are plenty of people out there who continue to do these things, no matter what. As you get older, your body cannot handle the things that it once did. Alcohol and cigarettes lead to illness are much faster when you are at retirement age. Many people feel that they can make an excuse to continue these bad habits. Many feel as though the damage has already been done.

Alternatively, they think they have already lived a long enough time, so it doesn’t matter anymore. Keep in mind that if you have grandchildren, they will want more time with you, and they can’t do that if you’re stuck in the hospital. Your health and your quality of life will also decline, meaning that you will not be able to enjoy your retirement as much as you would with clean eating, a healthy lifestyle, and removing toxic chemicals from your body.

<< Previous

NEXT >>

There are minimum 401k withdrawals. Credit: Shutterstock

3. Failing To Take Required Minimum 401K Distributions

Believe it or not, there is a minimum amount of 401k withdrawals you need to make every year during your retirement. Many people make the mistake of taking less than the minimum, hoping that it will extend into future years. However, if you snooze, you lose. Believe it or not, there is a minimum amount of 401k withdrawals you need to make every year during your retirement. Many people make the mistake of taking less than the minimum, hoping that it will extend into future years. Nevertheless, if you snooze, you lose. That is because there are serious tax penalties if you fail to take the required minimum amount, and those penalties may be more than you can afford to pay.

The tax you have to pay may be as much as 50% of the difference between the required distribution and the actual distribution. According to the IRS, you must start taking money out of your 401k when you are 70-and-a-half years old. A Roth IRA does not require any withdrawal until after the death of the owner. At that point, whoever is listed as their next-of-kin will need to take out that retirement money. To learn more about this, visit the IRS website, where they have a list of frequently asked questions.

<< Previous

NEXT >>

Make sure not to spend all of your retirement savings when you are still in your 60’s. Credit: Shutterstock

2. Overspending In Your 60s

Most people get excited about freedom and live their lives the way they have always dreamed of during retirement. Moreover, for people who finally can withdraw funds out of their 401K that was automatically deducted from their paychecks for decades, it can suddenly feel like you have won the lottery. Because of this, there are unfortunately many people out there who make the mistake of overspending in their 60s.

They might start to go on vacations, buy a new car, boat, or house. However, this could end up putting you in a lot of debt, debt that you can’t afford to pay off while you’re still alive. It means that your debts may pass on to your children. That would be a burden on their financial woes as well. Instead of overspending in your 60’s, try to be as frugal as humanly possible. Look ahead and budget for the coming years.

<< Previous

NEXT >>

You never know if you will live to be 100 years old. Credit: Shutterstock

1. Underestimating Your Life Expectancy

Some people will assume that they will live to a certain age because their parents and grandparents had that same life expectancy. However, with new medical breakthroughs happening every year, you never know if a cure is around the corner for something that will extend your life. What if you live to be a hundred and fifteen years old? You might live so much longer than you would ever imagine.

Try to plan until you are 100 years old instead of only 75 or 80, and treat your health as if you aim to live to 100. This way, if you save more money than is necessary, this is a good thing. Excess savings will never be a problem because you have a lot of money to help you in an emergency. It will also mean that your loved ones may have something left behind to help pay for your funeral and other expenses.

<< Previous