5 Common Mistakes Retirees Make
By Lisa Strohm
Congratulations! You made it to retirement. After decades of dedication and hard work, you can finally relax. You’ve survived child-rearing, climbing the career ladder, and paying off your house. Now all that’s left is to sit back and live out the rest of your years on blissful autopilot…
Unfortunately, this common belief often leads to disaster. Yes, retirement is a time for rest and relaxation. Yes, you have fewer responsibilities. Yes, you should enjoy yourself. The end is in sight—but don’t let your guard down yet. There’s just a few more things you need to “get right,” and if you don’t, you could be in for a rocky retirement. Let’s take a look at five major mistakes you should avoid.
Underestimating Your Years In Retirement
Do you know how long your nest egg needs to last? No? Me neither. Nobody does. Unless you’re a fortune-teller (in which case, why are you reading investment advice?), it’s impossible to predict how long you’ll live. We do, however, have estimates. According to the Social Security Administration, 25% of today’s 65-year-olds will live to be at least 90 years old. Ten percent will surpass 95. (1) That means, to be safe, it’s wise to budget for 30 years of retirement. Sure, celebrating your 100th birthday and bragging to all your great-great-grandchildren would be a blast—but not if you’re broke.
Waiting To Enroll In Medicare
There’s a lot going on in the years transitioning into retirement. It’s easy to let things slip through the cracks. Don’t let enrolling in Medicare be one of those things. You have three months to enroll after your 65th birthday. If you forget, you’ll be hit with a 10% premium hike for every year that passes. However, there are some exceptions. The premium increase does not apply if you’re already receiving Social Security, are still covered by employer-provided healthcare, or are volunteering abroad. (2)
Forgetting About Inflation
While it’s recommended to invest less aggressively as you get older, be careful not to be too conservative. You don’t want inflation wiping out all your gains. You might think dumping your money in a “safe” money market account or short-term CD is a good idea. Think again. Sure, you might receive a small guaranteed return of, say, 3%. But if the rate of inflation exceeds that 3%, you are actually losing buying power. Whatever you do, don’t forget about inflation.
Taking Social Security Benefits Too Early (Or Too Late)
Deciding when to start drawing from Social Security is one of the most important retirement decisions you’ll make. It shouldn’t be taken lightly. Obviously, everyone’s situation is different and there’s no one-size-fits-all answer. But in general, the longer you wait, the higher your monthly payments will be and the more security you’ll have. Those who wait until age 66 will receive about 25% more than those who begin drawing at 62. And if you can hold out until you’re 70 years old, your monthly payment will increase by another 32%. (3)
With that in mind, another mistake is waiting too long. Depending on your circumstances, you might want (or need) to start drawing earlier. The moral of the story is to avoid choosing an arbitrary age to start drawing. Weigh the pros and cons and decide what’s most advantageous for you.
Following Investing Advice From Family And Friends
They love you. They want to help. They have your best interests at heart. But you know what they’re not? Experts. In life, you get lots of “do-overs.” Fail a test? Retake it. Burn the hamburger? Throw on another patty. Screw up a job interview? Schedule another one. In retirement, there are no do-overs. You have one chance to get it right. Take the wrong advice—even if it’s well-meaning advice—and it could drastically affect how your retirement years play out.
That’s why, when it comes to investing in retirement, it’s essential to only follow expert advice. At The Athena Network, expert advice is exactly what you’ll get. If you’re interested in having a guide to help you navigate through important retirement decisions, email me at firstname.lastname@example.org, call 484.224.3439, or click here to schedule your free introductory meeting.
Lisa Strohm, CFP®, MBA is the founder and CEO of The Athena Network and Good Life Advisors of the Lehigh Valley, fee-based wealth management firms. She specializes in providing financial planning, investment management, and life management services for women and their families across the U.S. With more than 18 years of industry experience, she sets her firms apart from traditional wealth management companies by focusing on providing clients with an educational, collaborative, supportive experience that inspires her clients to engage in their financial lives. If you have a question, please click this link to schedule a phone call today. To learn more, visit https://the-athena-network.com/ or connect with Lisa on LinkedIn and Facebook.
Investment advice and financial planning offered through Good Life Advisors, LLC, a registered investment advisor. Good Life and The Athena Network are separate entities.