3 retirement mistakes you might regret
Oonce you’ve left the workforce, making sound financial decisions becomes even more crucial. This is because you have less time to recover from your mistakes and could have more limited income than you had while receiving a paycheck.
Unfortunately, seniors sometimes make costly mistakes that come back to haunt them. Here are three common mistakes you’ll want to avoid if you’re hoping to have enough money to live a comfortable life in your later years.
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1. Live beyond your means
You want to enjoy your retirement, but it is essential that you do not spend so much money on it that you use up your nest egg too quickly.
It’s easy to get caught up in travel and leisure expenses during the early years of retirement as you get used to your newfound freedom. Unfortunately, you might be faced with expensive and unavoidable healthcare costs later in life, and you might really regret spending too early if you have nothing left to cover them.
2. Don’t think long term
Most people spend decades in retirement, so any decisions you make about your financial future should be made with an emphasis on the long term.
For example, if it may be tempting to pretend Social Security as soon as you become eligible for benefits at age 62, you should know that this reduce the size of your monthly checks for the rest of your life. it would be will probably also leave you with less income for life, and could potentially put your spouse at risk of lost earnings if you reduce survivor benefits with an early claim.
Whether you are making the decision to apply for Social Security benefits, choosing where to live, or deciding your rate of withdrawal from your retirement investment accounts, don’t think about what is good for the next few years. Instead, think about how the decisions you make will affect the rest of your life.
3. Not paying attention to your investments
Throughout your career, you’ve likely focused on growing your retirement nest egg. You will need to make a big change in your mindset once you start making withdrawals. But you can’t lose sight of the fact that you still need your money to earn a reasonable rate of return so that your accounts don’t run out too quickly.
This means that you should always be careful about what you are invested in and make sure that you have a diversified portfolio, that you are exposed to the right level of risk and that you do not pay more fees than necessary.
Retirees generally need to adopt a more conservative investment mix because they have less time to recover from market downturns. But they should still have money invested in the stock market, so they should spend time researching investments.
The good news is that if you watch your portfolio, think long term, and live on a budget that allows you to maintain a safe withdrawal rate, you can hopefully be financially secure for the rest of your life. You just need to avoid these three retirement mistakes to make it happen.
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