Retirement Mistakes to Avoid
Retirement is the goal for every working individual in America, but a comfortable retirement should also be a part of that goal. Unfortunately, each year there are millions of Americans that make mistakes entering retirement. Some of these are small and easily avoidable, while others require caution and attention to detail to avoid. If you are worried about potential mistakes during retirement, read on to learn about five common ones to avoid.
Increase in Spending
One of the biggest mistakes many retirees make is hitting retirement and going off on a massive spending spree. This rarely involves spending too much around the home on luxury items or clothing, but rather trying to get out and do all the things they could not do while fully employed. For most, this entails traveling the country or the world site-seeing, golfing more often on a nice sunny day, or fixing up their houses by remodeling or making repairs.
After a few months or years, they suddenly realize that they have spent too much money in one year and damaged their overall retirement savings. As Forbes notes, tigers never change their stripes. If you were a doer in your working life, stick to your routines you already enjoy. If you were cautious, retirement is not the time to change and throw caution to the wind.
Moving Too Soon
A lot of people are itching to move somewhere warm and/or sandy once they have retired, but pulling the trigger too soon on a move based upon only a few factors could cost you more than you think. Many people cite specific factors such as low real estate costs or taxes as reasons for moving, but they underestimate the full range of costs that could eat up their savings. Before you decide to move during retirement, consider these points from CNBC:
. The cost of health insurance. If you are moving outside the US, Medicare is not an option, so you will need to buy a separate plan. Even from state to state in the US, Medicare coverage varies.
. Utility costs
. Grocery costs
. Fuel costs
These factors can add up to higher bills for you to pay, even though you might be paying less or nothing in terms of income and property taxes.
If you are not saving money, or are not saving enough, for retirement than it is going to be a long road ahead. Even if you eventually start, but do not do so until you are in your late 30s or even early 40s you are going to miss out on the benefits of compounded interest and the returns that such interest can bring. Wells Fargo notes that one of the biggest mistakes of those with a retirement plan is that they fail to maximize their contributions. If your employer pledges to match your contributions, do your utmost to sock away as much as you can in a company 401(k).
Where You Save
Keeping too large a percentage of your savings in fixed accounts, or jumping in and out of the market with up-and-down turns, are among the biggest mistakes that investors planning for retirement make. If you are going to go through the effort of saving, consult a financial advisor who can help ensure that your funds end up in diverse accounts with risk tolerances that match your investing preferences. For more information, please contact Indian River Financial Group.