All too often, seniors discover that they made serious mistakes in their retirement planning. Unfortunately for them, there may not be a way to undo what has already been set in stone after they retire. By learning from retirement mistakes of others, you can learn what to avoid and find better ways to ensure your retirement years are successful.
1. Understand How Long It May Be
People today often underestimate the length of time in retirement that they need to be financially ready for. Americans live years longer than their parents did, resulting in the need for more money. Many seniors have chosen to work past their retirement age of 65 to ensure they have enough.2. Evaluate Your Potential Needs
Understanding how much you need in retirement to enjoy a lifestyle like what you have now has a considerable cost. The sooner you calculate it, even though it may not be accurate, it will give you a good idea of how much you need to save. You can find a retirement calculator at Calculator.3. Remember the Potential Medical Expenses
Even if you are healthy now, you still must add possible medical costs. These costs will not get any cheaper in the future, but they may continue to skyrocket. The primary reason is the cost of new medicines.4. Start Saving as Soon as Possible
Because of the cost of retirement, it is necessary to start putting money into retirement accounts as soon as possible. Financial experts advise putting 10–15 percent of your income into your employer’s retirement plans.If your employer offers matching contributions to a traditional individual retirement account (IRA) or 401(k), put in at least enough to get the maximum amount. The matching amount is free money, enabling your account to grow much faster.
5. Build in Ways to Save on Taxes
There are many ways to reduce your retirement taxes before you retire (and some afterward), but some must be done in advance. One way is to put some of your retirement money into a Roth IRA or a Roth 401(k). These post-tax accounts allow your money to grow tax-free for as long as you want, and there are no taxes when you withdraw the money. Also, there are no required minimum distributions.6. Reduce Your Debt
The more debt you can eliminate before you retire, the less money you will need during retirement. Getting more debt just before you retire does not make sense if you can avoid it.One way to keep your debt low is to have an emergency fund. The fund should have about six months to a year’s worth of living expenses, which is even more important if you are self-employed. It can prevent you from putting unexpected costs on a credit card that charges interest.
7. Create a Realistic Budget
Before you retire, create a budget so that you know what you can afford each year during retirement. Not having a budget is one of the serious retirement blunders to avoid that can lead to a less desirable retirement when you run out of money too soon.The best way to avoid common retirement mistakes is to get professional financial advice from an estate planning lawyer, financial advisor, or investment professional. The earlier you seek their advice, the less likely it will be that you will have regrets later.