Layin’ It on the Line: 8 mistakes that can damage your retirement
Saving for retirement is essential if you want to maintain your lifestyle in your later years. However, there are a few retirement mistakes that can damage your plans and leave you scrambling financially. Here are eight of the most common mistakes people make when planning for retirement:
1. Not having a plan: Without a plan, it’s easy to make mistakes that can damage your retirement. Make sure to have a clear idea of what you want your retirement to look like and how you’re going to achieve it.
2. Relying on Social Security: Social Security was never meant to be the sole source of income for retirees. It’s important to have other sources of income, such as a pension or savings.
3. Not saving enough: It’s important to start saving for retirement as early as possible. The sooner you start, the more time your money has to grow.
4. Not having a diversified income stream: If you only have one source of income in retirement, you’re not diversified. What if that income stream dries up or becomes less than you need? A diversified retirement plan can help ensure that you have the income you need, when you need it.
5. Taking on too much debt: It’s important to pay off debt before retirement. Otherwise, you’ll be stuck making payments on things like credit cards and mortgages when you should be enjoying your golden years.
6. Overlooking health care costs: Extended care may be an expense that can undermine your financial strategy for retirement if you don’t prepare for it.
7. Withdrawing from your retirement accounts too soon: It’s important to leave your retirement accounts untouched for as long as possible. Withdrawing money too soon can result in costly penalties and taxes.
8. Not planning for long-term care: Many people need some form of long-term care as they age. This can be costly, so it’s important to have a plan in place to cover these expenses.
Which of these is the most dangerous for a successful retirement? Health care costs! It is vital you plan for this expense. Current data indicates this expense category will be a retiree’s biggest challenge to a successful retirement.
According to a new report, the projected lifetime cost of care for a healthy 65-year-old is $404,253 — and that doesn’t factor in long-term care costs, which could be as high as $100,000 a year.
Most Americans know medical care is expensive, with 80% of retirees saying they are worried about health care costs in retirement, but few are factoring in planning for it. It is estimated that at age 65, the annual spend on out-of-pocket medical expenses is close to $6,000 per person ($12,000 for a married couple).
The costs of medical care and health care expenses are rising at a higher rate than current inflation. It also has to do with people living longer and the need for more advanced treatments. More information can be found in the article “The real cost of health care in retirement” at rbcwealthmanagement.com.
Lyle Boss, a native Utahn, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.