Most American, on average, could live for 25 to 30 years after retirement. A proper retirement plan provides you with financial security for the rest of your life. Of course, retirement involves a complex decision making process. Each option comes with high stakes. The problem is that the choice usually comes only once. Therefore, you option is avoiding some common mistakes in retirement planning.
Retirement Plan and Common Mistakes to Avoid
In a post on Forbes, Steve Vernon cites some common mistakes of retirement plan that may prevent you from enjoying a financially secure life later. They include the following mistakes:
Too early retirement
Retiring too son may not be a right decision if you want to have a financially secure retirement days. Delaying your retirement means that you can increase your retirement income. Even few years of delay can mean much. Another alternative is downshifting to cover your current living expenses. By working part time for a while, you can save more for your retirement.
Defining the Amount of Retirement Savings
There is no magic number in retirement decisions. It is a mistake to think that if you have reached certain amount in your retirement saving, then you will have enough money for retirement days. You cannot accurately predict how you manage your finance for the rest of your life. You had better found a way to generate retirement income to cover your living expenses.
Claiming Social Security Too Early
Social security is certainly the largest source of retirement income for most retirees. It offers protection against common risks market crashes and inflation. If you live a long time, social security will be an income generator for the rest of your life. It makes sense if people want to maximize the amount of money in the social security account.
If you want to maximize the benefits, the best option if delaying the start of benefits. Many people make a mistake due to unexplained worries about the market. They think that the Social Security willl go bankrupt and then claim the benefits too early. Consult your financial adviser to determine the best time to claim the benefits.
Being Too Optimistic to Work Longer
Many people plan to work as long as they can even after the retirement day. As a result, they make a mistake in the retirement plan. It is true that you can improve your finances by working after retiring. However, there will be a time, when you are not longer able to continue working. Alternatively, you may change your mind: you are not willing to work anymore.
So, make sure to consider the finance in your retirement plan for the time when you do not work any longer. Actually, there are few other common mistakes that people do in planning their retirement. While you are still productive, make sure to plan your finance in old days carefully. This way, you can have a financially secure life.
Do not miss the discussion on other common mistakes of retirement plan. Knowing them helps you avoiding or taking necessary steps to minimize the risks.