Avoiding Financial Planning MistakesFinancial & Legal Planning | April 28, 2016
Most people look forward to their retirement years. After a lifetime in the workforce, it’s exciting to think about the endless possibilities and opportunities available to you when you no longer have to report to the office every day. However, being properly prepared financially for the changes retirement brings to your lifestyle is vital, and some seniors make financial planning mistakes that can be easily avoided.
Common Financial Mistakes Seniors Make after Retirement
Successful financial planning requires making some decisions and commitments you need to consciously stick to as you prepare for retirement. Seniors can often get confused by some of the complicated rules involved in their investments, and some of these mistakes made can have a catastrophic result on your retirement savings. Knowing some of the common financial mistakes made by seniors allows you to stay informed and keeps your nest egg intact. Here are a few to be aware of:
- Deciding to retire with little preparation. Many seniors will designate a target retirement age and as soon as they hit that age, they leave the workforce whether they’re truly financially ready or not.
- Getting behind in retirement savings- and giving up. Life can easily get in the way of our retirement savings goals. It’s difficult to save money in our younger years as we pay down college loans, buy a home and start a family. People don’t realize that every small step counts towards your savings, whether it’s increasing your contribution to your 401k by 1% or stocking away half of any raise you receive throughout your career.
- Not changing your lifestyle. Upon retirement, your budget will need to be adjusted to your new lifestyle. Some of the more frivolous expenses will need to be limited, like going out to dinner frequently or purchasing clothes. Plus, seniors need to remember to take healthcare and long term care costs into consideration.
- Taking Social Security benefits too early. Just because you are eligible for Social Security at age 62 doesn’t mean you should jump to apply. Taking benefits before the full retirement age of 66 means you’ll receive 25% less than you would have if you’d waited.
- Neglecting to downsize your home. The cost to maintain a large home continues to increase, even if your mortgage is paid for. A smart decision is to choose to downsize your home or move into a senior living community, where you can cut costs and have the peace of mind that your future healthcare needs will be provided for.
- Falling prey to senior scams. Scammers often target seniors, preying on their desire to quickly grow their retirement savings. Remember, if something sounds too good to be true, it probably is.
- Continuing to support adult children. It can be tricky to not help out family members if they are in need, especially your own children. However, working adult children are more easily able to recover from their own financial difficulties and rebuild their savings. If you’ve retired, avoid giving out large sums of money that could deplete your retirement savings.
Financial Advice for Seniors to Keep in Mind
It’s important to remember to plan for the long term to ensure a secure financial future. It might be difficult to delay some of the instant gratification we get from purchasing that new car or buying all new kitchen appliances, but it’s important to remember you’re simply delaying that gratification to be able to fully enjoy your retirement years.
For more information about American Senior Communities, please visit www.ASCSeniorCare.com.