The older we get, the closer we are to retirement. Even though we all know that retirement is an inevitable step in our life, planning for it isn’t as simple as it seems. However, it’s vital to create the right retirement plan so you can avoid living with regrets in your golden years.
For example, you can ask yourself how much you should save each month or where you should put your money. It’s crucial to start taking into consideration the answers to these types of questions before retirement.
Once you retire, it’s too late to ask yourself these questions. We all would want this, but there is no time machine available to go back in the past and do things differently. That said, it’s best if we spotlight the biggest regrets most retirees have.
Not only will you learn some new things that maybe you weren’t familiar with, but you can also start planning for your golden years by identifying and highlighting these common regrets.
Without wasting time, below you can find out the 8 biggest regrets most retirees have.
1. Accumulating Debt
No one enjoys knowing there’s a debt that must be paid. This kind of financial obligation can be a source of anxiety for some working people, and can definitely impact a retiree’s life.
Although some people take out loans to meet basic needs, most people take on debts to purchase items they don’t need. People in the labor force usually get loans thinking they can pay off the loans with their salary.
A loan may not feel like the end of the world, but be careful. If you don’t control your debt appetite, you may retire with some massive debts. As a consequence, you’ll have to rely on your retirement savings to pay off your obligations. To prevent this from happening, be sure to clear all your deficits before retiring.
2. Underestimating Medical Costs
If you rarely get sick, you may think you’ll be fine in your golden years. And because of that, you may not save money for healthcare. If this is the case for you, keep in mind that medical care can be pretty expensive for retirees if they fall sick.
Sometimes, in the case of life-threatening diseases, setting aside some money for unexpected medical costs may save your life.
On top of that, some retirees regret that they underestimated medical costs conveying that this was one of their biggest mistakes since their children are the ones who have to pay for them.
A senior pays on average $11,300 every year on healthcare, according to Registered Nursing. If you don’t save enough, the medical costs will quickly drain your retirement savings. To avoid this, consider buying long-term care insurance as soon as possible.
3. Retiring Too Early
Early retirement sounds like a great idea since you’ll have more time to do whatever you desire. Some folks have even been able to retire at the age 0f 30.
However, to retire at such a young age, you must be quite disciplined when using your retirement savings. If not, you may go into your 60s realizing you’re out of any savings. And that’s the moment you regret retiring too early.
If you retire early, you must be able to rely on your savings for many more years. The last thing you want to experience is to spend all your retirement savings when you would have been capable of working. Another thing to think about is that once you reach late retirement age, your chances of finding a job and supporting yourself decrease.
So, before retiring early, make sure you won’t regret this decision by saving enough money.
4. Not Investing
It’s understandable if you choose not to invest when you don’t have a stable income. But when you do have one, and you’re not investing, this may be a mistake you’ll regret later.
Loss aversion is one of the reasons many people don’t invest. Most folks tend to think that investing is based exclusively on stock markets, but that’s not true.
There are also non-risky investment options such as life insurance, for example. If you’ve made a habit of investing regularly, you won’t have issues meeting your needs since you can spend the income you’ve earned from investments.
During a survey, some retirees were asked what they would have done differently before retirement, and a big part of them indicated that they regretted wasting money on trendy clothes or shoes instead of investing in the stock market.
If you want to learn more about investing throughout your retirement, we recommend you read “Living Off Your Money: The Modern Mechanics of Investing During Retirement with Stock and Bonds “ written by Michael H McClung. It’s a great guide on how to live off your savings, but also identify a set of common practices for investing well. At one point or another, you will soon realize that investing is a terrific way of earning a couple of extra bucks.
5. Claiming Social Security Too Early
Some people will apply for Social Security benefits as soon as they retire. You can start collecting them at age 62, but you’ll receive higher benefits if you wait until you’re 67.
Also, if you choose to claim Social Security at 62 years old, you won’t be eligible to receive the full benefits. This means you’ll only be given around 30% lower than what you’ll receive if you wait until reaching full retirement age.
By getting lower benefits, you risk depleting them quickly. The National Bureau of Economic Research demonstrated in a recent study that early Social Security claims are related to a higher risk of living in poverty later in life.
However, there are some situations when claiming Social Security early proves to be the best choice for you.
6. Not Retiring Early Enough
Earlier, we highlighted that some retirees regret retiring too early. Well, there are also seniors who regret retiring late. One of the reasons why some of them may do this is because they love their job. Another reason may be that they haven’t set aside enough money for retirement.
Whilst both these two reasons are understandable, don’t forget that retirement should give you the time to do those activities you couldn’t do while working. As a result, it would be better if you were willing to enjoy doing some things other than work.
Also, not retiring early may be bad for your health. If you’re struggling with health issues, you may find that the best decision would be to retire. But if you keep working, chances are you’ll regret it later.
7. Not Diversifying Their Investments
Most employees are enrolled in a traditional 401(k) plan offered by their employer. If you’re also enrolled in this retirement plan, you contribute a certain percentage of your income without paying taxes.
Once you’re eligible to withdraw your contributions, you’ll have to pay some taxes. As general advice given by most retirees, don’t let your retirement savings depend on a single method.
As beneficial as a traditional 401(k) is, you should also have some money saved in other retirement savings accounts such as high-yield savings accounts and Roth IRA.
Most financial advisors recommend mixing lower risk and reward investments with higher risk and reward investments to minimize drastic price fluctuations over time.
8. Not Starting Retirement Planning Earlier
Obviously, the sooner you begin saving for retirement, the more money you’ll have to live a happy and comfortable retirement. But saving is not the only thing most retirees regret putting off. Most of them delay planning their retirement until the last few months before the big transition.
According to most retirees, there is much more preparation than they expected. As a result, they regret not planning their retirement earlier. And there’s one more thing here: having some savings isn’t enough to retire. It’s best to plan the details of your retirement at least a few years before the big day.
Here’s another article that may interest you: 5 Social Security Mistakes That Reduce Your Payments