Over 70% of adults have financial regrets, according to a Bankrate report, and their biggest financial worry is that they didn’t start saving for retirement early enough. Even high earners reported guilt over not saving for retirement early enough. Of course, there is much to consider when preparing for retirement. However, the source of regret for most Americans is avoidable. it’s important to measure your financial health regularly. Here are 8 costly retirement regrets we should all avoid.
Living beyond means in your peak years
Those who want financial security during their retirement years must make sure that they aren’t among those who are spending more than they make. If you are saving less than 5% of your gross income you are likely in over your head. The longer you keep your money invested, the more of it you will get out.
A late start on retirement savings
Most people in their twenties and thirties are not thinking about retirement. Beginning at age 30, if you were to save 10% of your $100,000 annual income in your 401(k), or $10,000 every year, and earn an annual rate of return of 5%, that money would grow to more than $900,000 by age 65.
Downsizing too late
As Gandhi (or someone) said, “There is no path to simplicity. Simplicity is the path.” This is one of the biggest hurdles for many people. They are simply unable to give up many of the items that clutter their lives due to sentimental attachments. Whether it’s moving into a smaller home or selling off a second car, don’t forget that you must already be living below your investment income going into retirement. Most people waiting to cut back at retirement will be drowned out by the cost of downsizing. Perhaps, you should be traveling and be enjoying the world much more than you did when you were younger. Chances are you will not need the huge house. Not to mention, you will be paying lower monthly bills.
Not taking care of your health
Most years, medical spending rises faster than inflation and the economy as a whole. As we get older, we tend to need more medical care and entering into retirement with bad health can be very expensive. The best way to avoid this retirement mistake is to remember that your health is your only true measure of wealth, so take good care of yourself. Start by making better food choices and also exercising to keep you looking young and vibrant. Include some physical activity in your routine. Get regular exams, screenings, dental checkups, and colonoscopies. Monitor your cholesterol, blood pressure, and weight.
Borrowing from yourself
A major mistake people make heading into retirement is borrowing from their retirement accounts to fund large purchases. The best way to avoid this money mistake is to remember why you started saving in the first place. These fees are put in place to remind you of the commitment you have made to secure your final future. Set measurable savings goals over a set period of time to meet this financial goal. You may have to get an extra job, however, it will be well worth it.
Moving without doing enough financial research
If you dream to live on a sunny beach with ocean view, be sure to thoroughly research your intended destination before you make the big move. Take several extended trips to the area you are considering at different times of the year, or better yet, rent a home for at least half a year before you totally commit. Favorite vacation destinations do not always make good choices for permanent day-to-day living.
Not getting professional advice
Even if you are a smart cookie with business experience, a financial advisor will probably be able to suggest investment options you might not be aware of that will help you save more money for retirement. They will have better insight into matters such as tax consequences and how much money you can safely withdraw after you retire.
Not cutting bad and costly habits
While it is OK to indulge yourself in whatever past time you choose, the retirement mistake here is forgetting to count the cost. A regular smoker will very easily spend three thousand dollars a year on cigarettes. This is money that could have been put into a ROTH IRA. You need to live a comfortable life in retirement must be greater than your need to have too much fun now.