For many years, financial experts have been warning that there is going to be a retirement crisis. According to the National Council on Aging, among people age 60 or over in the United States are already living at or below the federal poverty line. According to the most recent Retirement Confidence Survey by the Employee Benefits Research Institute, only 14% of adults in the country are confident that they will live in comfort after they stop working and 60% have savings of less than $25,000.
When it comes to retirement planning, not saving enough money is one of the biggest mistakes you can make. If you are working, you should try to save at least 10% of your monthly paycheck. Meanwhile, there are also other retirement planning mistakes that you need to avoid at all cost:
Spending too Much
Have you thought about how much money you will need for maintaining your current lifestyle when you retire? Many people do not have an idea, or they do not provide an accurate answer. The vast majority of people underestimate how much money will be required in retirement. It is pivotal to remember that retirees spend a large amount of money on eating, entertainment, and traveling, especially in the early stages of retirement when they have suitable health and time to enjoy these activities.
Overlooking Health Care Costs
Many people do not estimate what the cost of health care could be once they retire. Overlooking this part of retirement planning is a major mistake that you should avoid. It could leave you short of money when you are in your most vulnerable years.
Most people assume that these expenses will be taken care of by Medicare in retirement, but this is far from the truth. Every year, the cost of Medicare to retirees is rising – some of this is because of the major issues with the ACA and other reasons such as America does not allow people to find insurance plans over state lines which reduces competition and keeps prices artificially high and so on. This is why it is important for you to know what to expect. You should learn more about Medicare coverage, cost, as well as your options.
Not Updating Your Retirement Plan
It is paramount to make sure that you keep your retirement plan updated. There is always rise and fall of markets, as well as income levels and expenses. This is why you should revisit your retirement plan every few years. Your retirement plan should always be based on a relevant lifestyle. This way, you make sure that you make changes to your needs when you finally do retire.
Starting a Retirement Plan Late
Most people start saving for retirement when they are nearing the end of their professional life. Instead, they focus on saving for a house they plan to buy in the next decade or the car they want to own in the next three to four years. Because it is far away, they forget about retirement. You should keep in mind that it is beneficial to start early. One advantage is that you give your money more time to grow.
Not having a Long-Term Care Plan
Those who have cared for an aging parent know exactly how hard it is on their family and savings. To provide quality care, you need both time and money. According to the US Department of Health, care will be required by 70% of people over the age of 65 at some point in their lives. This makes it crucial to have a well thought out long-term care plan. It is also pivotal to know what your long-term care options are and how you will pay for these expenses in the future if the need arises.
Not Saving Enough
As mentioned earlier, many people do not save enough for retirement. This is one of the most important aspects of retirement planning. When you start saving early and make sure that you put some money aside every month for the future, it can be of immense help for your retirement years and create the ability to finance your retirement years decently. As you know, the future can be uncertain and by saving enough money, you make sure that you have the savings that will help you deal with any calamities that could arise. This is also called contingency planning.
By keeping these mistakes and ideas in mind when planning for retirement, you make sure that you have a sound retirement plan. Avoid these mistakes and you can retire at a decent enough age where you can still move around freely and smoothly and not have to worry about having financial problems when you are older. And that is one of the keys to life!