For most people retirement is something that happens only once in a lifetime. So it’s no surprise that many people make mistakes when first starting out. Luckily, there are ways to avoid some of these universal mistakes if you know what to watch out for. Here are some of the most common mishaps and how to avoid them.
- Lacking a life plan. Retirement is a difficult journey to travel without a map. Failure to plan properly for your retirement is almost certain to cause problems — and not just financially. Entering retirement involves a drastic change in lifestyle, and those that fail to plan for this new phase in their lives may be lost with all the changes. Be sure that you have a definitive plan for how you will spend your time and your money in retirement.
- Overspending. At first glance, retirement may seem like a time when you can get by on less, being without the costs associated with a job. However, retirement leaves you with a great deal of time on your hands — time that many people fill by shopping or taking lavish vacations. These splurges can add up quickly, derailing retirement goals fast. Watch your spending, especially in the first years of retirement, to be sure you are left with sustainable income for the years ahead.
- Claiming Social Security too early. Deciding when to claim Social Security can have a big impact on monthly benefits. Unfortunately, most people claim Social Security as early as they are able, regardless of whether the income is needed. Consider waiting until you can receive maximum benefits from Social Security if your retirement income can sustain you in the meantime.
- Being overly conservative with investments. There was a time when investing in low-risk options such as CDs and bonds could sustain a comfortable retirement. But in today’s world, the returns on these vehicles often don’t outpace inflation, and with retirees living longer than ever, this approach is doubly dangerous. Be sure your retirement investments allow room for growth to create income throughout your retirement.
- Retiring too early. The good news is — we are living longer than ever. The bad news is — we are living longer than ever. Individuals must plan for retirements that are much longer than generations past, meaning more savings are needed to last for a longer time. But, many people nearing retirement age are also in good health and very capable of continuing to work. Putting off retirement for a few years, if you are able, is a great way to give a last minute boost to savings that can make a big difference in your retirement income.
We’ve Been There Before
While it may be your first time dealing with the new world of retirement, our investment professionals at Navigator Credit Union have years of experience in helping individuals avoid these and other retirement mistakes. Schedule a consultation today to get expert guidance. Call (228) 474-3427 for more information.