The moment you choose to retire from the workforce and start spending your hard-earned savings for the rest of your life, everything changes. These changes affect your life both personally and financially, and you have to prepare yourself for the new lifestyle ahead of you. Getting a Retirement Planner San Diego will help you to adjust to these changes and make the whole retirement more bearable.
You may be thinking it is all just fun and a life without alarm clocks, but the responsibilities just shift. And you have to prepare yourself for them lest they consume you. After retiring, you have a lot of free time on your hands. The time that you can use to do more productive things that help make your retired life more comfortable.
At the same time, you must be cautious not to fall into any traps or mistakes that can make your retired life more miserable than you imagined. Have a look at these retirement planning mistakes more retirees are prone to make.
- Not planning for healthcare costs
When retiring, most people think about their living costs, house costs, utility costs, and other expenses. But healthcare costs always seem to slip their minds. This is usually a grave mistake as you come to realize later on that you need healthcare support as you get older. Often, you find people do not consider their healthcare costs as they are usually in good health or do not have any health problems when retiring. This, however, changes as you grow older.
- Scams and frauds
Many retirees always feel like they are immune to scams or frauds. However, the numbers of retires or senior folks that fall victims of scams and frauds each year may surprise you. Retirees and senior people lose billions of dollars to scammers every year. Most times, the scammers try to take advantage of a retiree who is looking to grow his/her savings. The best way to avoid falling victim of such vices is to consult with a financial advisor before you make any move regarding an investment.
- Failing to create a retirement budget
Shockingly, you find that over 40% of Americans set aside less than $10,000 for retirement. You may be comfortable with the amount you have in your nest egg. But you should ask yourself; how long will that savings amount last? The chances are it will not be enough to sustain you for long. So, have a decent amount for your retirement budget and even keep adding more cash to it if you can to make it bigger.
- Going on a spending spree
This is perhaps the most common mistake retirees make. You feel enthusiastic about retiring that you want to treat yourself to an expensive vacation, splurge on expensive items, renovate your home, or perhaps get a golf membership. However, if you have not budgeted for any of these luxuries in your savings, it is wise to refrain from even attempting them. Failure to do so will see your savings depleted faster than you anticipated.
As a new retiree, you always feel the need to want to make your retirement savings last for more years, several decades even. This is where all the pressure comes in as you now have to source for other forms of income and manage the savings you already have. After all, your regular paycheck is already out of the question. So, managing your spending needs is one sure way of ensuring you sustain a healthy and stress-free retirement nest egg.
This is especially important if your daily expenses were unnecessarily high while you were still on a paycheck. Consider these options to ensure you manage your expenses after retirement successfully.
- Try a bucket approach
Up to the point of your retirement, you realize that your income streams may still be producing more money than the amount you spend. But this rapidly changes the moment you get to retire. So, you may want to try as much as possible to ensure you try and keep the change to a minimum. To do this, you want to keep investing the excess cash in your account so you can meet your near-term liquidity needs. The bucket approach works to help you manage both your short- and long-term needs like living expenses, emergencies, and goals.
- Mitigate fees and increase efficiency
As a new retiree, you may also want to link your accounts across your different banks and brokerage firms. This helps make your finances easy to manage, be more flexible, and affordable. There may be some additional fees involved in the process, but the overall benefits far outweigh the cost.
- Rent or borrow instead of buying
Whenever you find items that you can rent or borrow instead of buying, then do so. This can save you a lot more cash in the long run. Think of all those DVDs and CDs you bought and have sitting somewhere accumulating dust. Rather, if you had rented those items, you would have saved yourself the hassles like upkeep and also provide you with extra storage space. Also, be careful not to just rent blindly. If you feel you may end up using an item for long enough, it might be best to buy it instead.
- Make smart investments
Before you venture into the investment field, you want to familiarize yourself with the different investment options that are available to you. The financial world is constantly changing and evolving. What you thought you envisioned in your early ages may not be what you find when you retire. So, try and worry more on how you can turn your retirement assets into a good reliable retirement income source.
- Prioritize spending
After retirement, the first thing that comes to people’s minds is to go on a shopping spree and buy all the things they have ever wanted in their homes and for their loved ones. However, unless you have set aside a good budget plan for these items, you should prioritize your overall spending as you may not have the income to support your new lifestyle.
- Downsize to save
This point also touches more on your expense income ratio. Remember you no longer have a paycheck you can always rely on to pay your expensive home. This is the time to think smart and downsize to a smaller more comfortable and less expensive home. You want to keep house costs such as utilities on the low from now on.
It is best to take some time to think things through about how you will manage your expenses after you retire. It helps you become more aware of your financial situation.
Without having a good retirement plan set, you can easily fall victim to one or two of these mistakes and end up regretting it for the rest of your life. It is, therefore, best to wise up and start planning your retirement as early as today and be in control when that time comes.