3 Retirement Pitfalls to Avoid

Quick Answer: Discover 3 retirement pitfalls to avoid for a secure future. Learn how safe money alternatives can help you plan effectively. Explore now!

You’ve worked hard for many years. Upon retirement, most people would like to live on their own terms. Maintaining a comfortable lifestyle requires you to take the proper steps to secure it. That includes avoiding common errors which could put your retirement finances at jeopardy.

With precautions in order, retirees will be more prepared to enjoy a secure – and hopefully financially confident – future. Having said that, let’s cover a few pitfalls which could do a number on your financial security.

Common Retirement Pitfalls to Avoid

Not ensuring you have enough retirement income. One of the biggest mistakes someone can make. When people retire, income from full-time employment goes away. It becomes a matter of replacing it with new income sources – namely retirement savings, investments, Social Security, or other vehicles.

If you don’t have a plan for retirement income, the alternatives can be grim. You and your partner may have to work longer, or you may need to find new ways to save as much as you can. It could even mean having to reduce your standard of living to fit your new situation. The bottom line is a shortfall in retirement income can greatly change your quality of life. It’s better not to leave it to chance.

Ignoring rapidly-rising healthcare costs. In recent posts, we’ve talked about how costs for healthcare are increasing. According to the Employee Benefit Research Institute, since 1999 employer-based health insurance premiums have gone up nearly 300%. HealthView Services projects that someone who retired in 2016 will face annual healthcare inflation of 5.1% for the next 20 years – or where healthcare costs increase 5.1% per year.

In real-world terms, someone retiring in 2016 may have to pay $33,000 more in healthcare costs than someone who retired in 2015 – due to inflation! Despite the growing expenses, many studies show retirees and pre-retirees neglect healthcare inflation in their planning. Healthcare costs will be one of the biggest areas of expenses for most retirees. Don’t forget to account for it!

Forgetting longevity risk. As everyone knows, people are living longer than ever before. With ongoing innovations in technology, lifespans may continue to lengthen. With these longer lifespans, there are more years to account for in retirement planning. It may seem appealing to use your life expectancy as an age-based metric for financial planning purposes, but this actually could be a mistake.

According to the Social Security Administration, about one out of four 65-year-olds today will live past age 90. Moreover, about one out of 10 65-year-olds will live past age 95. In reality, it’s difficult to say for how long we might live. A better approach is planning beyond personalized life expectancy metrics to help ensure you have enough money in retirement. On the whole, no matter what method you use, we believe the importance of planning for many years in retirement can’t be overstated.

Need Help?

Retirement planning can be a complicated process. According to research from LIMRA, seniors and baby boomers who work with a financial professional report higher confidence in their retirement readiness. Should you need help with planning for your retirement future, SafeMoney.com can help you.

Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Frequently Asked Questions About 3 retirement pitfalls you should avoid

What are the common retirement pitfalls to avoid?

Common retirement pitfalls include underestimating expenses, failing to diversify investments, and not having a clear withdrawal strategy. These mistakes can lead to financial stress and insecurity in retirement. It's essential to plan carefully and consider safe money alternatives to protect your savings.

How can I ensure my retirement savings last?

To ensure your retirement savings last, it's crucial to create a sustainable withdrawal strategy that considers your expenses and income sources. Incorporating safe money alternatives, like fixed annuities, can provide a steady income stream and help mitigate the risk of market volatility.

What role do safe money alternatives play in retirement planning?

Safe money alternatives play a vital role in retirement planning by providing stability and protection against market fluctuations. They can help preserve your capital while generating a reliable income, which is essential for maintaining your lifestyle throughout retirement.

How can I avoid running out of money in retirement?

To avoid running out of money in retirement, it's important to have a comprehensive financial plan that includes budgeting for healthcare costs and unexpected expenses. Utilizing safe money alternatives can help ensure your investments are secure and provide a consistent income, reducing the risk of depleting your savings too quickly.

Take the next step, run the numbers with our free retirement calculators.