Are You Truly Ready for the Next Phase of Your Life?
Woohoo! It’s officially time to kiss that 9-5 goodbye and head into the good life. With freedom on the horizon, it’s easy to dive head-first into retirement—but are you prepared to make the most of it? From claiming early social security to falling for scams, here are 20 huge mistakes to avoid making in retirement.
1. Going in Blind
We all love the idea of cashing in our last pay stub and enjoying a life of nature walks and hobbies—but retirees still need a plan before they call it quits. Where will you live? How much will you have every month? What do living expenses look like? Is your paperwork up to date? There’s a lot more to retiring than people think!
2. Putting Your Kids First
Selfless parents want the best for their children. Whether that’s contributing to their dream wedding or helping them with a down payment, parents often dip into their savings without thinking about the long-term consequences. Your savings are for you so make sure you budget before bestowing monetary gifts.
3. Falling for Scams
Seniors are far more susceptible to scams. With today’s technological advancements, it’s easier than ever to swindle people out of their hard-earned money. Remember: scammers ask for personal information over the phone or send faulty emails full of spelling mistakes. If you’re ever in doubt about an offer, get a second opinion. You can also call your financial institution to verify whether they truly contacted you.
4. Planning to Work Forever
It might seem wise on the surface to work indefinitely—but that plan could easily blow up. From layoffs and health conditions to outdated skills, boomers could lose their jobs for any number of reasons. Don’t bank on working past retirement age; contribute to your savings well before that.
5. Unwise Investments
Some retirees jump into risky investments. Others are far too safe with their money. Either way, they can both spell disaster. Sit down with a financial planner and learn the best way to invest your funds. The last thing you want is to have money just sitting there or to toss funds into haphazard stocks.
6. Forgetting About Taxes
Retirees pay taxes just like the rest of us, but not everyone prepares for the hit. Tax brackets range based on where you live, so it’s best to brush up on percentages. Remember that some states have estate taxes as well, which is one more thing to factor in.
7. Poor Financial Literacy
Do you know how your investments work? Do you know how much you need to save before retirement? Do you know how much you owe in taxes? Many of us aren’t as knowledgeable about personal finance as we think, which is exactly how we dig ourselves into debt or blow through funds.
8. Ignoring Potential Health Crises
You may be in the prime of your life now, but you never know what could happen ten years down the line. Though it’s morbid to think about, it’s also important to allocate funds for any potential crises so you’re not in the lurch for hospital fees, medication, or therapy.
9. Buying a Timeshare
Timeshares have long been peddled as sound investments—but we know better by now. From scammers who demand thousands of dollars upfront to insane maintenance fees, timeshares are more trouble than they’re worth. Don’t fall for the scheme.
10. Underestimating Your Lifespan
Your lifespan plays a big role in retirement. Most people live well past their 80s nowadays, which means you need to budget for a long, happy life. It's not just your own life either. It's worth ironing out your finances now in the event a spouse passes before you.
11. Forgetting About Inflation
Inflation impacts everyone, even retirees. Keep that in mind when it comes to rearranging your assets, particularly with investments. You can always speak with a financial advisor to figure out how best to stretch that rainy-day fund.
12. Keeping Too Much Junk
We all appreciate the odd tchotchke but retirees tend to keep every little thing piled in their hutch. Now’s the perfect time to clean house and enjoy a decluttered space—without dumping unwanted junk on your kids.
13. Adopting a Sedentary Lifestyle
Retirement is no excuse to plop in a recliner! While seniors can still indulge in relaxation, they should also work to keep active. Low-impact exercises like yoga and nature walks keep the mind and body healthy, which keeps you out of the doctor’s office.
14. Not Having a Budget
It’s easy to think you can live like a king in retirement. After all, you have all this money saved, so now’s the time to pick up the check or buy expensive birthday gifts. Not so fast! That kind of frivolous spending is exactly how retirees dig themselves into holes. Plan a budget and stick with it.
15. Eating a Poor Diet
Healthy retirees know the benefits of a good diet. From more fruits and vegetables to lean protein, seniors should speak with their physicians about what foods make the most sense for them. The right diet lowers your risk of heart disease, diabetes, and high blood pressure.
16. Turning Into a Hermit
While we all appreciate a little peace and quiet, don’t use retirement as an excuse to shut yourself away. Seniors need social interaction the same as anyone else, and with so much time on their hands, they have a wide-open schedule.
17. Letting Your Mind Rot
It’s one thing to veg in front of the TV every now and then—but it’s another to let that perfectly good mind go to waste. Stay sharp with puzzles, social activity, daily exercise, and reading. You could also pick up a new hobby!
18. Letting One Partner Handle Everything
Gone are the days when men handled all the finances. It’s important that both of you understand where your money’s going and how much you spend in a month. Should your partner pass before you, you’ll have a heck of a time learning everything from scratch.
19. Carrying Debt With You
Many people retire with mortgage or car loan payments, and that’s already pretty dicey. What’s worse, however, is retiring with high-interest student or credit card debt on top of that. Speak with your financial advisor to figure out whether you’re truly prepared for retirement—and what retirement will look like if you carry over debt.
20. Claiming Social Security Too Early
Claiming social security early makes sense for some retirees, but it’s ill-advised in other cases. Since everyone’s situation is different, it’s best to consult with your bank and weigh your options before making any final decisions.
