Mistake #1 - It’s not about the money.
That may be surprising to you. Most people plan for retirement by trying to figure out how much money they will need, when they will accumulate that amount of money, and whether it will last them for the rest of their lives.
But more important than that is - How do you want to spend your retirement? What is something meaningful and purposeful that you can do with your time and energy during retirement? Do you want to use the expertise and experience you gained during your working career to act as a consultant for other businesses? Do you want to work with a charity or some other cause that is meaningful to you? Do you want to spend your time with family and friends or on some activity that you’re passionate about?
I’d like to recommend a book to you called The New Retirementality by Mitch Anthony. It’s a very good book that will help you think about some of these nonfinancial issues of retirement.
Mistake #2 - Not being on the same page with your spouse.
If you want your retirement to be happy and content, make it a joint effort. If you’re single, think about how you’ll connect with other people during your retirement. Either socially, through activities that you enjoy, through charitable events, or through working part-time. However you connect with other people, that’s one of the most important things that you can do during a successful retirement.
Mistake #3 - Not making health a priority.
It doesn’t matter how much planning you do about your money; if you’re not healthy during your retirement, it’s not going to be a happy retirement. Neuroscientist Daniel Levitin, in his book Successful Aging, says that the two main things you can do to stay healthy during your later years are:
First - Move your body
He didn’t say exercise…that comes with some negative connotations sometimes - but keep moving.
Second - Keep connecting with other people
I’ve already covered that, but it bears repeating. That is healthy - physically and mentally.
Mistake #4 - Not having a comprehensive retirement plan.
Many of my clients tell me that they would like to spend more money in the early years of retirement, when they are healthy and can engage in activities they enjoy, such as traveling. They don’t think they will mind spending less money in their later years of retirement.
Without a plan, how do you know how much you can spend in the early years of retirement without running out of money before the end of your life? You could be living off your investments in retirement for thirty years or more. Our clients who have a comprehensive retirement plan are confident because they are able to use that as a road map to make sound decisions at every stage of their retirement.
Mistake #5 - Starting Social Security at the wrong time.
Making the wrong decision about when to start Social Security can cost you tens of thousands of dollars over your lifetime. There are a lot of items that have to be considered, including spousal benefits and earnings you may have from other sources. Part of our job is, simply, to help make sure that your money lasts as long as you do, and part of that is making the right decision about when to begin to draw Social Security.
Mistake #6 - Having the wrong investment portfolio.
This could be subtitled - Not taking inflation into account.
How much money will you need when you retire? How much annual income? $50,000 a year? $100,000? $200,000? How much will you need ten years after you retire? Fifteen years after you retire? Twenty years after you retire? You need an investment portfolio that not only provides sufficient income the year you retire, but it will also need to provide more income ten years later, fifteen years later, and twenty years later. So, a major part of our job is to make sure your portfolio provides a reliable income stream that grows as your cost of living grows.
Mistake #7 - IT'S. NOT. ABOUT. THE. MONEY.
I know that was Mistake #1, but it bears repeating.
Make good, sound financial decisions with the help of your advisor. If you’ve made good, sound financial decisions, then you can move on and confidently enjoy your retirement knowing that you can focus on those things that are more important to you than money. Thanks for taking the time to learn about the seven mistakes people make when they’re planning for retirement. If you’d like to talk with us about helping to plan for your retirement, we’re happy to have a chat with you.