Retirement planning poses an enormous challenge for most of us. It can be difficult to predict how long we will live, how much money we need, and all of the potential pitfalls that can cost us money in the future. And while it’s true that you don’t have a magic crystal ball that shows you the future, we do know that certain actions are almost always mistakes that cause major regret in the retirement years. Watch out for these five mistakes now, and you’ll be less likely to suffer second thoughts later.
Relocating. Many retirees are thrilled with their relocation, but others view the move as a mistake. The difference is probably the amount of time you spent analyzing your move. Is it too far away from children and grandchildren? How is the cost of living in the area? What about state taxes on retirement income? Will the weather really match your expectations? Many retirees move south, expecting warm weather year-round, and are shocked to discover that ice storms are no more fun than snow storms!
Claiming Social Security benefits too early. If you claim your Social Security benefits before full retirement age, your checks will be permanently reduced by as much as 25 percent. It can be tempting to go ahead and claim benefits and retire at age 62, but if you wait just a few more years you’ll earn your full benefit amount, plus you have four more years to pay off debts or stash money in your TSP.
Financing college over retirement. If you have kids, you understandably want them to have the best of everything. That includes the best education. But there are a variety of options to fund college tuition, such as scholarships, grants, loans, and work study. But there’s only one way to fund your retirement. This is one situation where you have to prioritize your own needs above those of your children.
Investing in risky schemes. Remember the old adage: If it seems too good to be true, it probably isn’t true. It can be tempting to multiply your retirement savings by investing in a high-risk scheme, but too many times we’ve seen people lose everything. Shoot for steady, dependable, and relatively safe growth instead.
Procrastinating on saving. You hear it all the time, but we should all start saving for retirement at the beginning of our careers. Over thirty or forty years, those savings can really multiply. But of course, most of us fail to do that. Start stashing as much as you can in your Thrift Savings Plan (TSP) every year, and try to get caught up. You’ll be grateful for this part of your retirement package one day.
These are just some of the pitfalls of retirement planning. As you can see, potential mistakes are hiding around every corner! But retirement planning can be easy with expert guidance by your side. Give us a call, and we can help you plan for a secure future.