Pursuing your retirement dreams requires a bit of preparation. As you develop your vision for the future, make sure you avoid these retirement mistakes:
- Having No Strategy
The biggest mistake is having no strategy at all. Yet, only 18% of Americans have a written retirement plan in place.[i] Without this framework, pursuing your retirement goals can be challenging. Aim to develop an approach for both your working and retirement years, and revisit them as needed.
- Missing Tax-Deferred Savings
Many workers have access to 401(k)s or other types of tax-deferred programs. Some even offer an employer match. Unfortunately, about one-in-five participants doesn’t optimize their match.[ii] Consider ways to avoid leaving this free money on the table by maximizing any employer-matching contributions. Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.
- Forgetting High Health Care Costs
The cost of health care rose higher last year: A 65-year-old, male-female couple that retires in 2019 should be prepared to pay $285,000 in health care expenses during their retirement years.[iii] From prescription costs to extended care, medical expenses can add up. Outline your potential health care needs today, so you’ll be prepared for tomorrow’s medical costs.
- Keeping Too Much Debt in Retirement
Retirees aged 65 to 70 years old have an average of $20,643 in non-mortgage debt, which may include car loans and credit cards.[iv] You may want to consider managing or reducing your debt level as you prepare for retirement.
With a well-crafted strategy, you can be proactive and better manage some common retirement pitfalls. We’re happy to help you make the most of your retirement.
[i] https://www.fa-mag.com/news/most-americans-don-t-have-a-written-financial-retirement-plan-44471.html [ii] https://www.usatoday.com/story/money/personalfinance/retirement/2018/02/12/1-in-5-americans-are-making-a-terrible-401k-mistake/110251212/ [iii] https://www.cnbc.com/2019/04/02/health-care-costs-for-retirees-climb-to-285000.html [iv] https://www.lendingtree.com/debt-consolidation/places-where-people-at-retirement-carry-the-most-debt/