No one wants to live with regret, but many of us have made decisions that cause us to cringe when we look back on them, especially when it comes to money. But whether you wish you had worked harder in college or regret how much you spent on your newest phone, you can’t change the past. You can only take the lessons you have learned and move forward.
The same goes for retirement. Many people, 55%, according to a Global Atlantic Financial Group study, (1) enter retirement and discover several things they wish they’d done differently. Thankfully, you can avoid problems in your own retirement by learning from the mistakes of the millions of people who have gone before you. Here are four common retirement regrets to keep in mind as you prepare for your golden years.
1. Retiring Too Soon (Or Too Late)
Whether you are forced to retire earlier than planned or you decide on your own, retiring before you are ready can cause plenty of regret. In fact, 30% of retirees admitted they would gladly re-enter the workforce if a job became available. (2)
If you decide to retire before turning 65, you will probably have to find pre-Medicare coverage, which is often quite a bit more expensive than an employer-sponsored plan. By waiting until you turn 65, you will qualify for Medicare and not be forced to obtain other health insurance to cover you during the transition.
Financially, the earlier you retire, the fewer years you have to save and the longer you will have to live, not working. If your finances are keeping you up at night or you are living at a lower quality of life than you are used to, you may regret retiring when you did.
Working even a few years longer can provide these valuable benefits:
More time to accumulate savings
More years to apply toward Social Security, which could result in a larger benefit amount
Health insurance coverage through your employer
Purpose and identity
Stronger mental and physical health (3)
On the other hand, another common regret is waiting too long. If you have enough money saved and you and your financial advisor have planned for every aspect of your golden years, you should consider retiring as soon as possible. The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it. The point is this: your situation is unique. Be sure to take a good hard look at your financial situation to ensure your money will last, and don’t let your retirement fears hold you back.
2. Carrying Debt Into Retirement
The less debt you have when you enter retirement, the better. Reducing your consumer debt before retiring helps you lower your monthly expenses and enables your savings to grow and last longer.
Review all current debts you face and compare interest rates and balances. This can help you decide which to pay off first. Once you’ve eliminated credit card and auto debt, see how you can aggressively pay off your mortgage. Being mortgage-free could reduce your monthly expenses by up to a third and make a significant impact on how you spend your savings.
3. Overspending In The First Years Of Retirement
Even if you have a solid nest egg saved to carry you through retirement, you still need to exercise financial discipline to ensure your money lasts. Dipping too deep into your savings as soon as you retire could make or break your retirement dreams. Practicing self-control to resist impulse buying and unnecessary spending is very important if you want to see your savings pan out as planned.
However, these frivolous behaviors are not always to blame. It could be that you made a plan that sounded good on paper but just wasn’t flexible enough to allow for some stress-free personal spending. So, when developing your retirement plan, create a realistic retirement budget, factoring in travel or hobbies, then work with your advisor to find a withdrawal rate that will stretch your money for as long as possible.
4. Not Setting Retirement Goals
Free time is a major perk of retirement, but when you go from working full-time to not working at all, it can be a shock to your system. Saying goodbye to your career, your colleagues, and your routines can cause anxiety and depression. But if you make a plan for how you will fill your time with activities that fulfill you, you can avoid the negative emotions that can come with this major life transition.
Do you want to know what activities result in a fulfilling retirement? A BMO study on retirement planning reveals that retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life. (4) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (5) The takeaway here is to be intentional about your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality. It’s easy to lose your identity when you say goodbye to your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.
Experience A Regret-Free Retirement!
You probably don’t want to celebrate the incredible milestone of retirement and then wake up the next day wondering if you made the right decision. Deciding when and how to retire is one of the most difficult decisions you will make in life, but you don’t have to make the hard choices alone. Our team at D. Bryant Retirement Strategies can help you avoid facing these common regrets when you retire. Call us today at (402) 932-2141 or email firstname.lastname@example.org.
Darrell Bryant, CFS®, CAS® is Omaha’s Retirement Strategist. As the founder of D. Bryant Retirement Strategies, he focuses on helping individuals and couples nearing retirement do so successfully. Along with more than 30 years of experience, he received the Certified Fund Specialist (CFS®) designation and a Certified Annuity Specialist (CAS®) designation from the Institute of Business & Finance. Passionate about helping as many people as possible in his community, he hosts Retirement Strategies Radio, heard Saturday mornings at 8 a.m. on 1110 KFAB. He has also written articles on financial planning that have been featured on Fortune.com, FoxBusiness.com, Money.com, and in the Midland Business Journal. To learn more, visit his blog, his website, or connect with him on LinkedIn.