Mistake #1 - No plan for retirement money

The biggest error people make is simply not having a plan for their money in retirement. Everyone needs to create a cash flow scenario.  That's a plan that looks at expected retirement income from investments, Social Security and pensions and ensures it will comfortably cover all living expenses. Less than 20 percent of the people we have worked with have contemplated a cash flow scenario.  To get your complimentary cash flow scenario, click HERE

 

Mistake # 2 - Forgetting about inflation

Another mistake people make is forgetting that a dollar today isn't the same as a dollar 20 years from now.  Inflation can erode purchasing power and needs to be calculated into a cash flow scenario or retirement plan.  At the very least, retirees should make sure their investments are keeping up with the rate of inflation.

 

Mistake #3 - Failing to save enough money for retirement

Of course, the best plan in the world can't compensate for a retirement account with scant money in it.  A lot of people think they can't afford to save, but you can't afford not to. Eliminating things like eating out and coffee can free up cash to set aside for retirement.

 

Mistake #4 - Dipping into retirement accounts early

Though loans can be taken from 401(k) accounts and IRA money can be withdrawn early for needs like educational expenses, first time home purchases, etc., doing so is a MISTAKE!  That money should stay put and accumulate compound interest, which has the potential to add tens of thousands of dollars or more to an account balance over the course of a lifetime.

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Mistake # 5 - Letting all retirement money be taxable

This is a BIG ONE.  Not taking advantage of retirement accounts that can ensure some of your money is tax-free later in life can cost you dearly.  There are only three sources of tax free retirement income.  Do you know what they are?  If not, you are missing the boat and allowing Uncle Sam to dictate your retirement.

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Mistake # 6 - Underestimating health care expenses

Medical care is one of the biggest unplanned retirement expenses there is and continues to increase annually.  To minimize the effects, pre-retirees should review their Medicare options carefully to decide whether a Medicare Supplement or original Medicare combined with a Medigap policy will provide the best benefits now and in the years to come.

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Mistake # 7 - Filing for Social Security too early

This error could be considered the BIGGEST and most drastic. While retirees can begin benefits as early as age 62, their monthly amount will be lower than what they could receive if they waited until their full retirement age or FRA. Waiting past your FRA can reap additional benefits, too. Many don't realize that by delaying Social Security after their normal retirement age, they could receive an extra 8% for every year they wait to claim benefits, up to age 70. This can translate into tens or even hundreds of thousands of dollars across your lifetime.