Retirement is a key chapter in our lives. One which gives us the ability to rest, travel, or simply take time for ourselves. Before you retire, though, there are preparations and planning that should be done. Retirement planning is a vital step to ensuring happy and successful retirement years.
While you have likely thought about your retirement since you entered the workforce, as you get closer to your goal retirement age, you must take a more hands-on approach to your planning. A variety of retirement planning mistakes can hinder you from establishing the retirement lifestyle you want.
HarborChase Senior Living has retirement communities throughout the United States, and we know how important planning is to build your ideal retirement lifestyle. We want to share some common retirement planning mistakes to ensure success for future retirees!
Mistake #1: Not Having a Plan
According to the 2019 Retirement Confidence Survey conducted by the Employee Benefits Research Institute, of those surveyed, 48% had not calculated how much money they will need for retirement.
Failing to plan your retirement is a mistake many find themselves making, and you can never start planning for your retirement too early. Research if your company matches 401k contributions or has any extended retirement benefits. Investigating these benefits early will give you a headstart on your retirement planning.
A second step to combatting this retirement planning mistake would be to set financial goals for yourself that garner additional savings. This could include gradually increasing your 401k contributions every year until you reach your retirement age or considering other investment options. Regardless of what you choose, these savings should be tailored towards the goal of your retirement.
Mistake #2: Not Evaluating Costs
While many may have a plan on how to save for their retirement, another common mistake is not properly evaluating the cost of your ideal retirement. For the typical retiree, it is estimated that he or she will need 60% to 80% of their current income to maintain their current lifestyle when they retire. If you’re overspending and not budgeting correctly, these actions can directly impact your retirement planning efforts.
Evaluate your costs (housing expenses, taxes, etc.) and see if they line up with your current retirement budget. If you don’t know what your retirement income looks like, check out SmartAsset’s Retirement Planning Calculator and/or their Social Security Calculator to get a better idea of your retirement’s financial progress.
Mistake #3: Planning to Retire Too Soon
The Social Security (SS) Administration states that for those born between 1943 and 1954, their full retirement age is 66 (to receive 100% of their SS benefits). However, a significant number of Americans plan their retirement earlier than this age.
If you’re contemplating early retirement, it may benefit you, in the long run, to wait as your monthly SS benefits will increase until the age of 70. You can begin collecting your Social Security at the age of 62, but this action can reduce your benefits received anywhere from 20% to 30%.
Of course, everyone’s financial situation is different, and some may be able to retire earlier than others. This is why retirement planning is so important; it ensures you are making the right decisions for your circumstances and goals.
Mistake #4: Underestimating Your Care Needs
A final retirement planning mistake is not considering that you may need additional care or services in the future. Health and care needs can change quickly, and it’s crucial to include all scenarios in your retirement planning.
It is estimated that a newly retired couple at the age of 65 will spend $285,000 on healthcare and medical expenses during their retirement, which doesn’t include the cost of long-term care should the need arise.
Considering a retirement community may be a way to combat this. HarborChase Senior Living communities offer many levels of care from independent living to memory care services. We pride ourselves in our industry-leading hospitality; our communities host frequent events, programs, and social opportunities to create meaningful and engaging experiences.