As you get nearer to retirement, there is more pressure to plan ahead. Kiplinger’s article, “4 Big Retirement Regrets That You Should Avoid,” says that sometimes failure is the most effective teacher.
Retirees often consider their regrets and the things they'd do differently if they could. The following are a few of the more common mistakes retirees make:
- Quitting too soon. After all those years of working, it's hard not to dream of retirement. This decision, however, can be more emotional than logical. If you retire too early, you cut down on the time you have to save money, and you also lengthen the time you'll need that money.
- Depending too much on hope. When you retire, your amount of financial risk needs to change. Don’t keep the same investment strategy and look for big returns. In retirement, it's not as much about how much money you can grow, but rather it's about taking distributions. It’s not a gamble with the future. No, you’re risking money you need to live on right now. If there's a serious downturn, you could lose much of your lifetime saving, which may not be easy to recover.
- Cashing in too early. Many retirees regret drawing Social Security at age 62 rather than waiting until they reached their full retirement age (or even longer)—when they would have received bigger monthly checks. Without a strategy to address taxes and other expenses, they fail to address the potential issues when it comes to sustaining the lifestyle they want on the money that remains.
- Spending too much, planning too little and enjoying too late. Retirees frequently overspend in the first few years when they have their good health and freedom. Unfortunately, they don't have a plan to address their income needs, so they withdraw too much too fast to pay for that new life without considering the future.
There are also some who regret not doing enough in retirement, saving every penny but afraid to do anything. Others give no thought to what they'll do with their leisure time, and when health issues arise, they're sorry they didn't enjoy things more when they could.
It’s a balancing act—getting out and enjoying life and making certain you have the money to pay for it. This requires planning ahead, which is far better than living with regrets.
Reference: Kiplinger’s (August 2016) “4 Big Retirement Regrets That You Should Avoid”