10 Retirement Planning Mistakes You Shouldn’t Make, Ep #157

Most “Top 10 Mistakes You’re Making in Retirement” articles are vague, mostly common sense, and of little use to their readers. And when you read these articles, you have to consider the source. A bank is never going to tell you that having debt in your retirement is a mistake because they want to sell you loans!

I wanted to share mistakes that I see every single day working in my firm—mistakes that you won’t find in most articles. 90% of our clients are 55 and older working toward their dream retirement. I’ve seen it all. So in this episode of the Retirement Made Easy Podcast, I’ll cover 10 retirement planning mistakes you need to think about. 

You will want to hear this episode if you are interested in…

  • [1:41] Ask me questions at RetirementMadeEasyPodcast.com!
  • [2:45] Mistakes to avoid making in retirement
  • [6:08] Mistake #1: Not accounting for an early retirement
  • [8:39] Mistake #2: Neglecting planning for healthcare
  • [9:30] Mistake #3: Not understanding the impact of inflation
  • [10:40] Mistake #4: Neglecting tax planning 
  • [12:02] Mistake #5: Not understanding Social Security 
  • [13:30] Mistake #6: Failing to address long-term care expenses
  • [15:06] Mistake #7: Forgetting about the big ticket items in retirement
  • [18:40] Mistake #8: Not understanding how your money helps you reach goals
  • [20:43] Mistake #9: Not having your goals written down
  • [22:25] Mistake #10: Not understanding sequence of return risk

Mistake #1: Not accounting for an early retirement

According to the J.P. Morgan 2023 Guide to Retirement, 69% of people plan to retire at 65 or later but only 34% of people retire at 65 or later. The average age of retirement is actually 62. Why are they retiring early? Health problems, disability, company downsizing, or caring for a spouse or elderly parents. We have to plan for the unknowns. Things don’t always go as planned. What will you do for health insurance, paying off, debt, etc.? Why not run scenarios to plan for the unknowns (the best that you can)?

Mistake #5: Not understanding Social Security

I’m not an advisor that will tell everyone they need to wait to start accepting Social Security. But you do need to understand the ins and outs of Social Security. Social Security and Medicare are complex. It took me years to fully understand them. 

When I advise my clients, I also teach them the fundamentals about social security, Medicare, pension planning, investments, long-term care, etc. Once they have a basic understanding, we can make prudent decisions together. 

Mistake #6: Failing to address long-term care expenses

There are three ways to address long-term care expenses:

  • Avoid it entirely. This is what the majority of people do. I don’t recommend this—you need to have a conversation and think about the potential expenses, especially factoring in inflation. How will you come up with the money?
  • Transfer part of the risk to someone else, like an insurance company, through a long-term care policy or hybrid long-term care policy. 
  • Self-fund the potential future expenses and earmark investments for them so you’re not a burden on your children. 

If you don’t need as much care as anticipated, it’s money left over for your children, family, or causes you’re passionate about. 

Mistake #7: Forgetting about the big ticket items in retirement

You’re going to be retired, on average, for 30 years. What are your bucket list goals? Do you want to send your grandkids to college? Do you want to travel? Do you want to upgrade your car? One of my clients just paid more for his vehicle than he did for his first house. Now that’s an example of inflation. 

Where is the money going to come from? If you know what you want, you can plan where the money will come from. Too many people don’t think about it, cash out a large portion of their 401k, and completely detail their retirement.

Mistake #9: Not having your goals written down

You need to write down your goals and make sure you’re on the same page with your spouse. Imagine a wife’s goal is to leave an inheritance for her two children. She’d rather sacrifice her lifestyle in retirement to make sure that happens. 

But the husband worked hard for the money and knows the children are doing well. He wants to enjoy the nest egg and leave the kids whatever’s left. This couple isn’t on the same page. That will lead to problems. It’s hard to have a successful outcome if you and your spouse aren’t on the same page. That’s why you need to write down goals and come to some sort of agreement on them. 

Learn more about the remaining five mistakes in this episode of Retirement Made Easy!

 

Resources & People Mentioned

Connect With Gregg Gonzalez

Subscribe to Retirement Made Easy