Many people fail to navigate retirement planning the right way, consequently finding themselves just a few years shy of retirement and still without enough funds for the remaining years of their life. This can be a great source of stress, so if you find yourself guilty of common retirement planning mistakes, finding the best solutions for them is a must while you have time.
Rounded up below are five of the most common retirement planning mistakes and the solutions financial strategists recommend for them.
- Started saving late.
The ideal time for retirement planning to start is the moment you get your first job. However, if you’re like many who didn’t think of retirement until you hit your 30s, then it’s most likely that you’re still a long way from your ideal total. One of the best solutions for this is to increase your income – find opportunities that will not just help you augment finances but also grow the amount of money that you can direct to your retirement fund. With whatever extra time you have, strive to earn more. Also, instead of using your bonuses for splurges, direct those to your retirement fund to reduce the distance between your current savings and your target amount.
- Spent too much money.
Money wasted is money lost – there’s no undoing this unless you can part with possessions or sources of “convenience and joy.” Think about all the things you have and their true value in your life. Do you really need a third car? Do you need to maintain the swimming pool? Do you need the pool table in the rec room? Do you need 20 fishing rods or all the tools in your garage? You can recover some money lost by selling some possessions and putting sales into your retirement fund. Doing this won’t be enough, but it will bring growth to your retirement fund.
- Relying too much on Social Security and company pension plans.
Believing that someone else will take care of retirement for you is dangerous – there’s no certainty in what others will do for your sake. What you should do while you still have time (no matter how little it is) is to take matters into your own hands and seek the guidance of a financial adviser.
- Underestimating health care requirements.
If you’ve been relying solely on your company to cover your healthcare, you better stop because the common scenario is that companies only cover a small portion of it and you can still end up paying a huge amount of money should you need health care services during retirement. Financial advisers say you can still buy long-term care insurance in your 50s or 60s to cover this risk.
- You believe you’ll still work after retirement.
The idea of pulling a Robert De Niro in “The Intern” seems nice, but just because you want that doesn’t mean you’ll be physically up to it. Don’t bank too much on the idea of still working after retirement by exploring a different career or launching your own business; you need to consider your health and the cost of maintaining it. If you really want to continue earning after retirement, financial advisers say, find investments that will have your money working for you instead of you working for money. Passive income opportunities are your best options.