As you get closer to retirement age, there are certain things that you need to get organized. In order for you and your family to be in the best possible financial situation, you need to start preparing ahead, otherwise you could find yourself in debt, not being able to pay for any unexpected costs. To help with this process, here are three financial retirement mistakes that you should try and avoid:
Driving up Debt
By getting into debt before you retire, you might find that your savings take a big hit. Negatively impacting the amount that you’re able to save over the years, when you come to retire, you might not have enough money to live as you originally intended to. To help combat this, budget out your costs and plan for any unexpected or large expenses. By having an emergency fund, you can avoid debt and prevent yourself from having to dip into retirement savings.
It’s also a good idea to try and pay off this debt before you retire so that there isn’t any financial burden weighing on you or your family.
Not Considering The Cost Of Healthcare
Healthcare is expensive in this country – it’s an unfortunate fact. Which is why it’s so critical to plan for any healthcare costs that you might face in the future. Without doing so, you’ll find that you’re in a bad financial situation when faced with large hospital bills. Of course, as well as putting a little away each month you should also ensure that you have healthcare insurance.
Many will also recommend that you simply try and stay healthy throughout the years to decrease the chance of needing healthcare. And while this advice is good for the most part, if you have any unexpected illnesses/hospital bills, this won’t be the only thing that you’ll want to do. You want to have enough saved in a separate account to help foot the bill.
Not Saving Early
Figures from the Federal Reserve indicate that 36% of young/middle-aged adults think that their savings for retirement are on track. But the study also found that 44% say that they aren’t financially prepared for the next stage in their lives. To be in a good position financially, you need to be organized and prepared by saving early. By not saving now and putting it off for later, you’ll find that you’re able to save less – and therefore could struggle when it came time to leaving work.
A key way you can prepare for retirement, cutting back on expenses and prioritizing saving is one of the smartest decisions you can make. The main factor within your retirement savings plan, you’ll want to also consider inflation and how much you will get from your pension, social security or a 401(k).
Your financial plan should also include your expected lifespan, your lifestyle, your planned retirement age and your retirement location.
It’s never too early to start thinking about what will happen when it’s time to retire. And while this might seem daunting, it’s something that’s better to organize earlier rather than later. Along with planning your finances, you should also consider what will happen to your estate after you pass (think about looking at different estate planning firms, such as Mile High Estate Planning), who you’ll pass down your inheritance to and whether you will choose to reside in a retirement home, assisted living or another option.