Retirement is not a one size fits all endeavor. It is incredibly individualized based on a variety of factors including one's age, health, needs, desire to work or not, and more. One thing almost everyone can agree on is the importance of saving for retirement, but the way those funds are spent is also very individualized based on many factors as well. Therefore, what might be considered a mistake for one retiree may not be a mistake for another due to their different needs and situations. However, there are some common and universal mistakes that are made when it comes to retirement. While all of these may not apply to everyone, here is a list of those so you can be aware of them.
Don't Claim Social Security Too Early: A large percentage of older adults are claiming social security too early. Full retirement age for claiming social security is between 65 and 67, depending on the year you were born. Additionally, you can gain maximum social security benefits at age 70. Retiring early can leave significant money on the table. Fortunately, the Social Security Administration has revised their statements to show the amount received at different ages.
Look Into Survivors Benefits Before Claiming Social Security: When you claim social security will have a huge impact on the benefits your beneficiary will receive. For example, in the event of a wage earner's death, their widow or widower would receive less money if the wage earner claimed social security early.
Consider An Annuity: Some people do not consider annuities in their retirement plan. Unlike traditional accounts that could run out, annuities pay for as long as you live. Annuities also come with mortality credits. According to a marketwatch.com article, "mortality credits are created when people die sooner than expected and don’t receive as many income payments as they would have if they had lived their full life expectancy. That money goes into a pool that will then pay lifetime income to those people who live longer than their life expectancy." In addition to some people not knowing about annuities, the other primary reason people do not consider an annuity is because there is a cost involved in obtaining one.
Plan For Living Longer Than You Might Think: Perhaps the worst thing that could possibly happen in retirement would be to run out of money. People underestimate how long they will live all the time. Planning for a longer retirement is important in terms of not running out of money but also in terms of how you financially prepare before retirement.
Take Retirement Income Planning Seriously - It's Not Simple: Speaking with a professional advisor to address your unique situation is key. In addition, it is important to educate yourself. Some great places to glean information are the Social Security website and the Consumer Financial Protection Bureau.
Put Emotions Aside: It can be easy to have a lot of emotions about something as big as retirement and it is important not to only consider the short term. Instead, think about a variety of scenarios such as what an early retirement would look life if you lived into your 90's, for example. By considering a variety of scenarios, you can be better prepared to make an educated decision about your needs, desires and what you can afford to do.
Remember, not all of the points listed above will apply to every person and situation. It is always important to seek the advice of a professional financial advisor for your retirement needs and questions.