5 Common Mistakes Retirees Make
Retirement is supposed to be a comforting time in your life. You are transitioning from a life of long hours and hard work to a life of relaxation – or so you think.
A lot can go into retirement and you may not know exactly how to plan for it until you experience it firsthand. Well, it doesn’t always have to be a struggle. Here are some common mistakes retirees might want to avoid and tips on how to fix them.
1. Retiring too Early
A common mistake when planning for retirement is thinking you have enough money to retire. You never know when the economy may change or you’re hit with an event that leaves you dipping heavily into your retirement. If you’re thinking about retiring in the near future, you might want consider saving for X amount of years. Try and save extra for moments that are unforeseen. You might want to consider having an emergency fund in addition to your retirement fund.
2. Not Having a Retirement Plan
Retirement can be an overwhelming process. Why not, create a plan now so you can relax later. Before retiring, make sure you have an idea of what your monthly budget is. You will no longer have the same income as you did before, so you may have to cut back on some expenses. You also want to make sure you factor in your new health insurance plan (if you have one) as well as social security benefits (when they begin and how much you will be getting). Some retirees may also want to consider downsizing their home to save money or relocating to a more affordable area.
3. Not Changing Your ‘Spending Lifestyle’
When you retire you may feel tempted to go on a spending spree – and why not? You worked hard for your money, you should enjoy it! However, there’s a difference between spending and splurging. It is important to have a budget and stick to it, especially when your income has changed drastically. You might want to try and enjoy new hobbies and vacations in moderation. Try and make sure all expenses are factored into your budget before purchasing to avoid falling into debt.
4. Supporting Children and Grandchildren
It can be tempting to want to help out a child or grandchild who is in need of financial help. However, it may not be the best option for you. Whether you’re adult child is looking to start a business or needs a personal loan, it is important to first check your budget – for this can really deplete your retirement savings. You may not get this money back in a timely manner or even at all! You may want to communicate your financial situation with your child or grandchild before making any decisions. You don’t want to fall in a financial hole because you lent them a loan with no term and no regulations.
5. Keeping Money in Risky Investments
Like supporting your children and grandchildren, making risky investments could mean losing money you may never get back. When you’re working, these risky investments may not seem as “risky” because you still have an income and can earn back money to cover your investment. Instead keep money in safer investments. Your return on investment may not be as high, but you won’t be losing as much of that hard earned retirement savings if you do so.
Retirement should be a time spent with family building new memories. With more time on your hands you can do the things you weren’t able to do when working. It’s important to enjoy your hard earned money, but in a responsible way. Are you retiring soon? What other mistakes do new retirees make? Feel free to share your opinion and comments below!