One of the main reasons why people seek the help of a financial planner is to know, when and whether, they can retire. The simple thought of retiring can usher in a lot of anxiety, as many suffer from the sense of unpreparedness. Moreover, there are certain common mistakes that prevent people from embracing timely retirement. With careful planning you can evade these mistakes and move ahead towards a happy retirement.
Mistake One: High Living
A number of people either go for an inaccurate assumption or do not know the income they would require to maintain their current lifestyle in retirement. When the assumption is excessively high, the retirement goals appear absolutely unattainable, and the complete planning procedure becomes discouraging. On the other hand, given a low assumption, which commonly is the case, the retired person might face a hard financial state of affairs later in life and most probably would be forced to make unwanted, drastic, changes.
At the earlier stage of retirements, there is more spending on food, entertainment and travel while in the later part, a lot of expenses go to healthcare. The Kiplinger’s Retirement Calculator might give you a more or less accurate retirement number, wherein you will have the estimate of how much to save.
Mistake Two: Neglecting Soaring Health Care Costs
The estimate of health care costs at retirement is often the most neglected aspect of retirement planning. By overlooking this, retirees might land up facing cash shortage in the years when they are the most vulnerable. Careful planning is all the more required, because contrary to usual assumption, Medicare does not cover each and every health expense in retirement. Moreover, Medicare costs for retirees are increasing with every approaching year, so it is vital to know what you may expect.
Mistake Three: Avoiding Long-Term Care Plan
Any person who has taken care of an aging parent understands first-hand the impact it can have on their near and dear ones as well as their savings. Both the money and the time required to render quality care can prove to be staggering.
The US Department of Health states that 70% of people more than 65 years old would need care at some or the other point in their lives. As per projection, medical costs are expected to continually rise at a faster pace than inflation, it is important for you to plan for the long-term care options.
Mistake Four: Failing to Save Enough Then as well as Now
You must not wait to begin saving for retirement. The earlier you begin, the higher is the probability of attaining your retirement goals since compound interest can indeed work wonders. Hence, you must lay utmost focus on saving for retirement and begin saving at least a certain amount every month.
Mistake Five: Not Keeping the Retirement Plan Up-to-Date
Expenses and income levels rise and fall, as do markets, so you must revisit your retirement plan every 3 to 5 years, so take all these into account. As your life changes post-marriage or with a child being born, make adjustments accordingly. This will enable you to move ahead towards a better retirement.