Retirement should be some of the best years of your life, but if you’re not careful, times of leisure can quickly turn to times of stress. Here are some mistakes to avoid both before and after you retire.
Before Retirement
Not having a plan
How much do you need to retire? How long do you think your retirement will last? How will you save for retirement? Have you factored in medical expenses? These are just a few of the questions you’ll need to answer in your retirement plan. Without one, you could quickly find yourself in financial trouble.
Paying high fees
Investment fees can chip away at your savings without you even realizing it. Variable annuities and high-yield investment options can sound enticing, but the fees can end up costing you thousands. Before investing, be sure to know the *dollar amount* you’ll be paying in fees each year.
Accruing too much debt
For some, debt is a part of life, but too much of it could delay or even keep you from retiring. You need to plan to pay off as much debt as you can before you retire. That said, don’t let your debt stop you from getting started on a retirement plan. If you wait until you’ve paid off everything before you start saving, you may not be able to save enough. Reducing debt before retirement is crucial for a stress-free golden age.
Taking too many risks
You may choose to invest in high risk stock early on to get a higher return. However, the more risks you take, the better your chances of losing your earnings, possibly even your principal. Don’t let the potential for high returns cost you more in the end. The closer you get to retirement, the more conservative you need to be with your investments. Deciding between saving and investing for retirement requires a balanced approach to ensure both safety and growth.
After Retirement
Spending too much
Many retirees make the mistake of spending too much in their first few years, putting them way over budget. Don’t let this happen to you. With retirement comes necessary lifestyle changes. Transitioning to a fixed income requires you to set a budget and stick to it.
Underestimating future expenses
From planned expenses, such as travel, to the unexpected ones, like a medical emergency, it can be easy to underestimate how much things are going to cost after retirement. You need to plan for the future with a realistic, practical mindset.
Getting scammed
Senior citizens and retirees have are the largest demographic of fraud victims. It’s a terrible reality, but the older you are, the more of target you become. It’s very important to approach any and all investment opportunities with skepticism. At the same, you need to take extra steps to keep your financial information safe and secure. Protecting against identity theft in retirement is essential to safeguard your hard-earned savings.
Not investing conservatively
Once you retire, you may continue to invest. However, you’ll no longer be in a position to make high risk investments. You should begin invest more conservatively the closer you get to retirement, and continue to do so after you actually. The risks simply aren’t worth it.