Given recent longevity trends, you’re likely to be retired for 20 to 30 years, which might equate to a third of your life—or more! You’ll want to plan ahead of time and act to ensure your long-term financial security, health, and happiness.  

To prevent the worst retirement blunders, you must be realistic and plan. Unfortunately, it is too simple to make poor financial decisions when planning and investing for retirement. According to the Federal Reserve, 31% of non-retired persons think their retirement savings are on track. However, none of the 69% who believe they are not on track intended to sabotage or underfund their retirement plans.  

If you are among the 69% of people not on pace for retirement, you can begin (or continue) your path by avoiding these planning blunders. 

1. Not Saving Enough Although Working

The first mistake is failing to save enough money although working—a common regret among retirees. To help with this, automate your retirement security by saving also each week through your employer’s retirement plan if you’re eligible or through an IRA with a trustworthy financial institution. 

It’s ideal to assess how much you should save for retirement each year based on your present age and desired retirement date. Many financial institutions provide online calculators to help with this chore. If you require assistance, you can talk with a financial expert.   

While you go about it, avoid making a mistake when planning for retirement; that is to underestimate your lifespan and ignore the inflation rate. This will allow you to remodel your approach and plan beforehand. 

1. Quit Your Job Early

The average worker changes jobs around a dozen times over their career. Many people do this without understanding they are missing out on employer contributions to their 401(k), profit-sharing, or stock options. It’s all about vesting, which means you don’t have full ownership of the funds or stock that your employer “matches” until you’ve been with the company for a certain amount of time (usually five years).  

Don’t quit until you know what your vesting position is, especially if you’re close to the deadline. If you’re approaching your vestment date, you should assess if leaving those assets on the table is worth the job change. 

1. Apply for Social Security Benefits 

You can apply for benefits at age 62. Still, the amount you receive will be up to 30% lower than if you waited until what the Social Security Administration considers “full retirement age” (FRA). 

Choosing to get benefits before your FRA may lower your benefits if you opt to continue working. For every $2 earned above a certain threshold, which is $22,320 in 2024, you lose $1 in benefits. If you don’t need the money, think about waiting to apply. 

1. Fail to Adopt Conservative Investment Approaches

When you were younger, you could invest more aggressively since you had time to make up for any losses. As you approach retirement, the game changes, and you may want to reconsider the level of risk you accept. You’ll need the assets you’ve accumulated for day-to-day expenses, which may increase owing to inflation, and you won’t have the luxury of leisure you once did. 

It’s important to use a capital preservation strategy, especially in the early years of retirement, when you’re starting to withdraw assets from your retirement fund. Without this approach, the combination of expenditure and turbulent markets could cause a setback for your portfolio, which it may be unable to recover. 

1. Making Poor Investment Decisions

Make sound financial decisions, whether through a company retirement plan or a standard, Roth, or self-directed IRA. Some people choose self-directed IRAs because they offer more investment alternatives. That’s not a bad idea, as long as you don’t jeopardize your funds by investing in “hot tips” from untrustworthy sources, like investing everything in Bitcoin or other high-risk options. 

For most people, self-directed investing entails a steep learning curve and the guidance of a trustworthy financial advisor. Paying excessive fees for underperforming actively managed mutual funds is another poor investment decision. 

And don’t go that path unless you’re willing to properly direct your self-directed IRA by making sure that your investment decisions remain sound. Most consumers would choose low-fee exchange-traded funds (ETFs) or index funds. Your 401(k) plan sponsor must send you an annual disclosure that details costs and their lasting results on your returns. Ensure to read everything because there may be policy or fee changes that will lasting results your investments. 

1. Don’t Account for Healthcare Expenses

According to a Nationwide Retirement Institute survey, one of the main retirement-related anxieties for 72% of persons aged 50 and above is that their retirement bills will spiral out of control, and two-thirds worry that a single health-related crisis might wreck their finances for years to come. 

Given the current state of healthcare costs, these findings are not surprising. Consider this: The average couple will need $315,000 in today’s currency for medical bills in retirement, excluding long-term care. 

To make matters more complex, it is predicted that the average 65-year-old will need long-term care at some time. And one in every five 65-year-olds will need long-term care for over five years. Because of these figures, analyzing the possible need for long-term care is another central element to think about when calculating asset erosion.  

A long-term-care insurance policy can assist retirees pay for the costs of long-term care services. It may also expand your care options and relieve loved ones of full-time caring responsibilities. 

In the end! 

No matter where you are on the path to retirement, you have most likely made mistakes along the road. Suppose you don’t have enough saved, attempt to start saving more today. Take on a part-time job and contribute the money to your retirement account. Set aside any raises or bonuses for your investment fund. 

We have to point out that to avoiding the issue areas listed above, seek guidance from a well regarded financial consultant to help you stay—or get back—on track.