Retirement Planning

Are You Making These 5 Retirement Mistakes?

How to Ace Your Retirement

When you think about retirement, saving and investing generally come to mind first. But there’s more to planning a comfortable retirement. The decisions you make — or don’t make — can inadvertently undermine your retirement planning efforts.

Avoiding these five common pitfalls can help ensure a more comfortable lifestyle when you’re ready to retire:

Mistake #1: Misjudging your lifespan

InvestmentNews reports that as of 2014, there were more than 72,000 Americans 100 or older — a 44% increase since 2000. By 2050, there are expected to be a million centenarians in the United States and many people living well into their 90s. Underestimating your life span can wreak havoc on your retirement planning. The rule of thumb? Plan for a longer life and carefully manage withdrawals to avoid draining your savings too soon. Check out the Longevity Illustrator for a broad range of life expectancy possibilities based on your age and overall health.  

Mistake #2: Collecting Social Security too early^†

Monthly Social Security checks can make up a significant portion of post-retirement spending money. That’s why there are strategic moves you can make to increase the size of those payments. Financial Engines estimates that individuals have missed out on as much as $100,000 in lifetime benefits by claiming Social Security too early; and that you can collect an extra 6% to 8% for each year you delay claiming benefits between ages 62 and 70.

Mistake #3: Miscalculating medical expenses

For someone in good health, it’s hard to picture a day when you may not be. And even with Medicare benefits, co-pays and deductibles can add up quickly — and not all the medications and services you need may be covered. According to Fidelity Investments, a 65-year-old couple that retired in 2017 will need an estimated $275,000 to cover future medical costs. Make sure you have enough in your savings to fill the gap, and consider a supplemental health insurance plan.

Mistake #4: Overspending  

Many retirees find they actually spend more money in the first few years after leaving the workforce. From taking vacations to making home renovations, it’s easy to splurge on things you’ve dreamed of while working. By creating a budget based on long-term planning, you can track your spending more carefully to make sure you always have enough money in the bank.

Mistake #5: Relocating prematurely

Moving can be tricky. Some retirees decide to downsize to a less expensive home, and then get hit with higher property taxes or capital gains taxes. Others move for lower real estate costs, then find they’re spending more money on food, gas and taxable items. Before making the decision to relocate, do your homework. Talk to retirees who live in the area, identify potential hidden costs and research taxes compared to the cost of living. Crunch the numbers to see what you can really afford.

More cash flow, less worry

Making decisions about your future can be stressful — but having options to free up much-needed cash can alleviate some of the worry. A reverse mortgage can allow homeowners age 62 and older to be more financially prepared for retirement. Don’t prematurely rule out this option, which could help you convert your home equity into funds that can be used for consolidating debt, buying a home, making renovations, paying for health care or in-home care, supplementing your income, establishing a “rainy day” fund, and so much more. To speak with an experienced reverse mortgage specialist, call RMF at 888-277-1567.

This information is intended for those who are interested in financial education. This information is provided for convenience only, and RMF makes no warranties concerning the accuracy or completeness of any of the information. Information is subject to change without notice, and RMF is under no obligation to provide updated information. Materials or statements made by a third party and located or posted on the Site are those of the third party and do not necessarily reflect the official policy or position of RMF. This is not financial, tax, compliance or legal advice and should not be taken or relied upon as such. Each individual should consult with his/her financial, tax, or legal professional.  All mortgage origination services are provided by Reverse Mortgage Funding LLC, a state licensed mortgage lender, which is licensed or otherwise exempt from state licensing in the states in which it originates mortgage loans.

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