The closer you get to retirement, it seems, the more pressure there is to plan ahead. But how do you know if you're coming up with the right answers when you're facing life-changing questions—and there's so little room for error? When should you stop working? How much money should you have saved? How can you make sure that money lasts?
Sometimes failure is the best teacher. When I talk to retirees, they frequently bring up their regrets—things they say they'd do differently if they could. Here are a few of the more common mistakes retirees make that we all can learn from:
1. They called it quits too soon.
After decades of working, it's tough not to dream of the day when you can retire. People in their late 50s see the numbers on their retirement account statements, and they think, "Wow, that's a lot of money! One more bad Monday at work, and I'm retiring!" The decision to retire can be more emotional than logical. But when you retire early, not only do you cut down on the time you have to save money, but you also extend the amount of time you'll need that money.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. They relied too much on hope.
After you retire, the amount of risk you take with your finances should change. Many keep the same investment strategy they've always had, hoping for big returns. But in retirement, it's not so much about how much money you can grow anymore; it's about taking distributions. You're not gambling with some far-off future—you're risking the money you need to live on right now. If there's a serious downturn—such as the one in 2008 when the markets dropped 38% to 40%—you could lose a significant amount of the money it took you a lifetime to save. And you may not be able to easily recover from that loss.
3. They cashed in too early.
Many people regret drawing from Social Security at age 62 instead of waiting until they reached their full retirement age, or even longer, when they would have received larger monthly checks. They said, "I've paid into it long enough; I'm ready to get something back." Or maybe they started dipping into their IRAs at 59½, then their savings and then they're forced to take Social Security sooner than they planned. They're winging it, without a strategy to address taxes and other expenses—and eventually they realized they could have problems sustaining the lifestyle they wanted on the money they had left.
4. They spent too much, planned too little and enjoyed too late.
Retirees often overspend in the first few years. They have their health and this newfound freedom, but they don't have a plan to address their income needs. They withdraw too much too fast to pay for that new life without considering the consequences.
But there are also those who regret not doing enough in retirement. They save every penny and are afraid to do anything. Or they just don't have any ideas at all for what they'll do with their leisure time—something that will get them out of bed in the morning. And then, when they start losing their health, they're sorry they didn't have fun while they were able.
As with every aspect of retirement, balancing the desire to get out and enjoy life versus finding the money to pay for it requires planning ahead. But that certainly beats living with regrets.
Curvin E. Miller IV is vice president of Russell & Company Total Wealth Management. He is a Chartered Retirement Planning Counselor designee through the College of Financial Planning, has passed the Series 7 and 66 exams and is a licensed insurance professional.
Kim Franke-Folstad contributed to this article.
Russell & Company offers securities through Kalos Capital Inc. Member FINRA, SIPC. Investment advisory services offered through Kalos Management Inc., 11525 Park Woods Circle, Alpharetta, GA 30005. (888) 356-1950. Russell & Company is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.
-
You Don’t Want to Retire in Portugal: Here Are Three Tax Reasons WhyRetirement Taxes With the NHR benefit retiring and pension taxes increasing, you might rethink your retirement plans in Portugal.
-
Home Depot's Winning Ways Fueled Its 100,000% ReturnHome Depot's wide moat leaves little room for competition – and shareholders have profited as a result.
-
Financial Pitfalls to Avoid in Your 30s, 40s and 50sAs you pass through each decade of working life and build wealth for retirement, watch out for the financial traps that can hinder your progress.
-
Five Key Retirement Challenges (and How to Face Them Head On)Life will inevitably throw challenges at you as you get older. But making a flexible retirement plan — and monitoring it regularly — can help you overcome them.
-
Four Action Items for Federal Employees With $2M+ SavedIf you can't stand the chaos, maybe you can walk off into the sunset of retirement. Here are some thoughts on how to figure out if that would work for you.
-
How Tariffs Could Impact Affluent RetireesThe wealthier you are, the less price increases on groceries and cars will hurt you, but if markets dive or we enter a recession, that's a different story.
-
How to Help Shield Your Retirement From InflationPicking the right investments at the right time can help ensure inflation won't flatten your retirement savings. Here are some tips.
-
Six Steps to Simplify Your Estate for Your HeirsA simplified estate strategy will expedite the settlement of your estate after you're gone, lower audit risk, reduce costs and cut your beneficiaries' stress.
-
Three Actions to Protect Wealth Transfer Amid Tax UncertaintyHow should families plan to pass on their wealth amid ongoing uncertainty over estate taxes? Even if TCJA provisions are extended, they might still be temporary.
-
Business Owners: How to Calculate Your Wealth Gap in Five MinutesHow much would you need from the sale of your business to retire without sacrificing your lifestyle? This simple calculation will give you an idea.
