In the 1980s, Boomers witnessed the evolution of retirement plans from the regular paycheck style to the 401(k)s. Since then, every future retiree decided their fate, and retirement mistakes come with more dire consequences.
For this reason, we’ve put together the most common retirement mistakes Boomers should avoid in order to spend their resting days without regrets.
Lack of a Healthy Plan
Every dreadful retirement is most likely a result of poor planning. On the other hand, there’s hardly any blissful retirement without robust and careful thought. But what could make a future retiree leave their resting years to chance?
Sometimes, it could be distractions from a highly demanding job or a comfortable salary-powered lifestyle. In some other cases, it could be the belief that retirement plans begin and end with savings.
A Risky Investment Portfolio
As retirement approaches, the stakes get higher. Therefore, the consequences of taking risks with investment portfolios tend to be more severe. That’s because your investments might not have the time to recover from the negative outcomes of a volatile market.
Experts will, therefore, advise that soon-to-be retirees adjust their portfolios to lower-risk investments such as cash and bonds.
Failure to Maximize Your Savings
As time brings down the curtains on your working years, your salary is likely to become fatter. At this point, you can either choose to spend more or save more. Wise workers will opt for the latter.
Also, you can take advantage of this season of plenty to optimize your salary. How? It’s simple. Make a painful effort to cut down on your expenses. You’d be happy you did.
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Lack of a Financial Advisor
Investing in the wrong business could make your retirement days a nightmare. That’s why you need a third eye to help you spy into the market and identify the right investment opportunities.
Of course, hiring a financial advisor would cost you extra money. However, the benefits you would get from it in the long run are more than worth it.
Not Maximizing Your Employer’s Match Benefits
Unlike in the past, employers now encourage you to save for your retirement. With employer match benefits, you’ve got all the motivation you need to keep more money aside.
So, here’s the trick. If your employer can as much as match half of 6% of your salary, it would pay you a lot more to contribute the full amount. That’s about a 50% return on investment for you.
Not Drawing Out a Budget
Yet another costly mistake retirees make is underestimating retirement expenses. This error causes financial shortfalls that could affect every other retirement plan.
For this reason, the need to draw out a budget cannot be overemphasized. A good budget should be painstaking and comprehensive. You need to foresee and prepare for every significant expense that awaits you.
Bearing Too Much Housing Expenses
One mistake retirees make, especially in modern times, is placing too much value on owning a big house. While it’s true that a house increases in value, the cost of property taxes, utilities, repairs, and maintenance is at an all-time high.
Except things change, having a bigger house could be a great disadvantage to your finances. So, consider selling your house to buy a smaller one and save more money.
The Early Splurge
Those early days of retirement can be pretty tricky. Just fresh into your newfound “freedom,” there’s a huge temptation you would face to splash the cash. This period is called the “go years.”
On the contrary, those are the periods you should be more frugal with your expenses. Making rash spending decisions at this time could spell doom for the rest of your retirement years.
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Not Spending Enough and Enjoying Your Retirement
While it’s great advice to be frugal with retirement funds, some retirees tend to go overboard by underspending.
Ultimately, your fulfillment is the goal of your retirement savings. So, don’t rob yourself of the good time. You worked hard for a large part of your life. You deserve to rest and enjoy the rest of your years.
Spending Heavily on Working Family Members
Some retirees spend more money on working family members than they should. While it’s difficult to turn a blind eye to genuine needs, you also need to consider that your savings are limited, and so is your ability to earn more money.
Meanwhile, your adult children have all the time and energy to get back on a solid financial footing. Therefore, prioritize non-working family members who need those loans and large monetary gifts.
Falling Into Scams
One of the hurdles retirees must cross to guarantee a blissful post-work era is fraud and scams. Scammers usually target retirees by preying on their greed. Remember, any financial return that sounds too good to be true most definitely is.
Also, be careful when giving out intimate banking information to unverified callers. Get a second opinion before submitting that huge amount to any investor.
Getting into Huge Debt
If you ever need to borrow money, it should be within your working years when those salary paychecks are still rolling in. But not in retirement.
Boomers often make the mistake of venturing into the scary waters of debt after retirement. This is a costly mistake. Paying off a debt is excruciating without a regular salary. Instead, focus on reducing your expenses for a while, and you should be fine.
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