7 Retirement Planning Mistakes to Avoid

Given recent longevity trends, there’s a good chance you’ll be retired for 20 to 30 years, which could mean you’ll be retired for a third of your life – or more! You will need to plan ahead and take steps to help yourself be financially secure, healthy and happy for the rest of your life.

This article explores seven common retirement planning mistakes that people make during their working lives and how you can avoid them. First, we’ll look at two mistakes that people of all ages can make. Next, we’ll focus on five additional mistakes that apply to those in their 50s and older.

Two retirement planning mistakes that should be avoided for all pre-retirees

1. Not saving enough money while working

The first mistake is not saving enough money while you work; a common regret that retirees typically express. To help you do this, put your retirement security on autopilot by saving regularly, either through your retirement plan at work if you qualify or through an IRA at a reputable financial institution.

It is best to calculate how much you need to save annually for your pension, given your current age and when you want to retire. Many financial institutions offer online calculators that can help you with this. If you need help, you can also consult a financial advisor. At a minimum, contribute the maximum amount your employer has in their savings plan, if you qualify.

2. Not take steps to improve your healthH

The second mistake to avoid is not taking steps to improve your health. When retirees are asked what will make them happy in retirement, a common answer is “good health.” As a result, you’ll want to take action to improve your diet, exercise more, maintain a healthy weight, get enough sleep, and eliminate unhealthy habits like smoking or drug and alcohol abuse. Take advantage of a wellness program if your employer offers one.

If you avoid these two mistakes, you can be in a good position to be financially secure and healthy during your retirement years.

5 Retirement Planning Mistakes to Avoid

Now let’s look at five mistakes that people over 50 need to address.

1. A big retirement planning mistake to avoid for people in their 50s or older

Once you reach 50, retirement is in sight and you will need to make more plans to achieve your goals. The biggest mistake is not spending time learning about the most important decisions you need to make and visualizing your life in retirement.

Think of it as your retirement job and give it the same focus and attention that you may have given to preparing for your working years. For example, you may have spent a lot of time obtaining a university degree, gaining professional qualifications and undertaking on-the-job training. A good place to start training for your retirement job is by exploring the issues discussed next in this post so you can avoid making these mistakes.

2. Not understanding why you want to retire

Another common mistake to avoid is not understanding your reasons for wanting to retire. Many people just assume that this is the right thing to do at a certain age and then retire without giving much thought to their actual life in retirement. Instead, you want to answer the ‘who-what-when-where-why’ question about pensions.

The answers to these questions will help you understand important financial issues, such as how much money you will need in retirement and where you might live. It will also help you think about how you will spend your time and what will make you happy in retirement.

ForbesAn essential but overlooked question: why do you want to retire?By means of Steve Vernon

3. Focusing too much on investing and overlooking other important financial decisions

Many pre-retirees confuse retirement planning with investing. While deciding how to invest your savings is an important task, there are other decisions that can be more important to your financial security. These important decisions include:

• When and how you will retire (whether you will work part-time for a while)
• When should you start taking Social Security?
• Where to live
• How to get health insurance before and after you qualify for Medicare at age 65 and how much it will cost

Avoiding these mistakes can help you avoid becoming poor during your retirement years.

ForbesSix key decisions to make during the critical retirement transition zoneBy means of Steve Vernon

4. Not preparing a spending plan for your retirement years

As you get closer to retirement, you can’t just hope that everything will go well for you when you retire. Instead, develop a plan to balance the common sense formula for retirement security:

• I >E, or a retirement income greater than the cost of living

This task consists of two components:

• Building a portfolio of retirement income, and
• Insight into your living budget, broken down into your ‘must have’ and ‘nice to have’ housing costs.

Forbes7 common pension spending mistakes to avoidBy means of Steve Vernon

Addressing this potential mistake can go a long way toward making your money last during your retirement.

5. Not preparing for vulnerability

It is inevitable that most people will be less able to continue living independently after the age of 80 and beyond. Many people may need long-term care, which can be very expensive. All retirees should take steps to avoid financial loss from making mistakes or becoming victims of financial fraud.

The best time to address these potential mistakes is when you retire. These decisions can help you determine whether you need to set aside financial resources for that period of your life and even where you want to live. By addressing these potential mistakes, you can avoid becoming a burden to your children and others who may need to care for you.

Forbes4 steps retirees can take now to avoid burdening their childrenBy means of Steve Vernon

Wow! It may seem like a lot of work to avoid these mistakes, especially those that apply to people in their 50s and older. That’s why you want to give it the time and attention it deserves. Your future self will thank you for preparing well for retirement.