Many of us look forward to our golden days, the days where we can simply kick back, relax, and do a lot more things we didn’t have time for during our days of labor. How comfortable and secure your retirement will be depends on how well you prepare and how few mistakes you avoid. Are you aware that more than 40% of Americans are at risk of not being able to maintain their standard of living in retirement?1 The reason being many aren’t aware of the many retirement pitfalls and end up falling victim.
Don’t let it affect your lifestyle, secure your retirement by watching out for these costly mistakes:
- Claiming Social Security too early. You’re entitled to start taking retirement benefits at age 62. However, you may want to wait as your payout will grow approximately 8% each year that you hold off on claiming up to the page of 70.2
- Borrowing from your 401(k). The purpose of a 401(k) is to save money and you’re defeating the purpose by using it before you retire. As a matter of fact, you’ll be losing money. If you’re not making contributions, not only is the entire balance that you borrowed missing out on any potential growth, but the lack of each future contribution isn’t growing either. Before borrowing from a 401(k) in the event of an emergency, consider other loan options. This is also a good time to rethink having an emergency fund for these reasons.
- Putting your kids first. As parents, you want your children to have the best of everything, including best education. But remember this–you can borrow for college, but you can’t borrow for retirement. Parents should explore opportunities for scholarships, grants, and student loans instead of looting their retirement funds.
- Ignoring long-term care (LTC). At some point of your life, you may need ongoing medical attention. 7 in 10 Americans who reach age 65 will need some type of long-term care, according to an industry research.3 And these services come with a hefty price with the cost of health care in a nursing home averaging close to $100,000 a year and rising annually.4 Consider LTC insurance as a part of your financial planning as a way to relieve the financial burden and mental stress for those years ahead.
- Putting off saving for retirement. The greatest financial regret of Americans was waiting too long to save for retirement, according to an industry survey.5 Many believe that they don’t need to start saving until they’re 10 or 20 years away from retirement, but one should start saving for retirement as early as the beginning of their career. Starting early can give you more flexibility and opportunities down the line.
These are just a few out of the many retirement challenges you may face. How to avoid them is to be informed and be prepared. Call us and we’ll help you sift through all of the different scenarios and discuss any concerns you may have.
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[1] https://www.marketwatch.com/story/now-the-bad-news-and-slightly-less-horrible-news-about-saving-for-retirement-2018-03-07
[2] https://www.fool.com/slideshow/7-good-reasons-claim-social-security-early/
[3] https://www.forbes.com/sites/joeljohnson/2018/01/12/long-term-care-insurance-and-the-importance-of-developing-a-plan/#383c5603479d
[4] http://www.altcp.org/long-term-care/long-term-care-statistics/
[5] https://www.cnbc.com/2018/05/16/americans-biggest-financial-regret-could-be-costing-them-thousands.html