What do you dream about when you think of retirement? Travel? Pursuing a new passion? Spending time with family? Retirement is the time to live life on your terms and spend your time doing what you love the most.
Unfortunately, there could be some roadblocks standing in the way of your dream retirement. Many of those roadblocks may stem directly from your planning decisions. Retirement is a major financial goal, and there are a number of planning mistakes that could leave you unprepared to fund your desired lifestyle.
Below are four planning mistakes to avoid while you prepare for retirement. If you can avoid these planning decisions, you can improve your odds of achieving retirement success and living the kind of retirement you’ve always imagined.
Using family mortality history to estimate your life expectancy.
Many retirees assume that they won’t live beyond a certain age because their parents or other family members passed away around that age. While life expectancy can be based on family history, it’s also based on a number of other factors. Advances in medicine have helped to extend life expectancies for retirees. It’s not uncommon for today’s retirees to live into their 80s, 90s or beyond.
While retirees are now living longer than ever, many are still continuing to leave the workforce at the traditional retirement age of 65. Some are forced into retirement even earlier because of disability or job loss.
If you retire in your early to mid-60s, there’s a chance you could be retired for 30 years or more. It’s possible your retirement could last longer than the amount of time you’ve actually spent saving.
You can prepare for a long retirement by continuing to grow your money even after you retire and by maximizing your guaranteed income. Consider tools like annuities, which may offer growth potential along with income that’s guaranteed to last for life.
Failing to account for inflation.
It’s easy to overlook inflation during the planning process, but it’s too important to ignore. Inflation is the gradual, incremental increase in the price of goods and services from year to year. While inflation may not be noticeable in the short term, it can be corrosive to your spending power in the long term.
Inflation is usually modest, but even a modest level of annual inflation can have a big impact, especially if it’s compounded over a long period of time. You can plan for inflation by factoring it into your budget and developing a strategy that generates increasing retirement income.
Assuming Medicare will cover everything.
Medicare is a valuable resource for retirees because it covers a broad range of medical expenses. It doesn’t cover everything, though. In fact, it only covers a portion of most services, and there are other services and treatments that aren’t covered at all.
Be sure to remember that you will likely face substantial out-of-pocket health care costs as you get older. You may have to pay for things like deductibles, premiums, copays and much more. Develop a funding strategy, perhaps one that includes a health savings account (HSA) or a supplemental Medicare policy.
Not creating a written retirement plan.
Nearly all of these roadblocks and more can be identified and avoided with solid planning. Take time to think about your ideal retirement, and then document the expenses that may come with your desired lifestyle. Also, map out your projected income and develop a strategy to overcome any potential savings gap. A detailed, comprehensive plan can help you stay on track.
Ready to overcome your retirement obstacles? Contact us today at Coventry Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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