Retirement planning is significantly different today than it was for older generations. Our expectations may be diverse, but no matter what age one plans to retire, or the type of lifestyle expected, these five tips from Forbes are helpful to think about or talk about with a financial advisor.
1. Living too large
No matter what your income level, “living too large” can frustrate retirement planning. A key question our financial advisors always ask is: what kind of lifestyle do you have now, and what do you want in the future? It is important to know how much income you will need to maintain your current lifestyle into retirement. Our advisors can give you a real estimate of what that number might look like—a key component to determine what you need to save. If your estimates are too high, the amount will seem discouraging and retirement will look more like a fantasy than an approaching reality. Conversely, if your estimates are too low, you will not be able to adequately prepare financially. This means underprepared retirees could face trying financial choices during their most vulnerable years.
2. Health care costs
Another retirement planning mistake is “disregarding higher health care costs.” Fidelity estimated that a 65-year-old married couple that retired in 2012 would incur an average of $240,000 in healthcare costs alone during retirement. Medicare may cover some costs, but our financial advisors know that Medicare coverage varies, and many couples learn this the hard way. Preparing for higher medical costs during retirement is a crucial way to avoid financial stress later in life.
3. Long-term care
Another reality of retirement is that long-term care can be expensive and time-consuming. Quality care comes at a price, but planning now can offset the cost. Whether it is in-home care during a period of recuperation, or making the choice to move into a nursing home, there are fees that need to be addressed. It’s important to include long-term care in your retirement planning and budget. Knowing your options is the first step to avoiding an expensive surprise when you need the help the most.
4. Not saving enough
Another mistake is “not saving enough then and now.” This mistake is likely common sense for many families. Nonetheless, it is something everybody should remember as they begin to consider their finances long-term. The sooner you start saving for retirement, the better chance you have of reaching that retirement goal. Our financial advisors can help make your money work for you, maximizing compound interest and making smart moves to reach those saving goals.
5. Updating your retirement plan
Finally, “not updating your retirement plan” can be a costly mistake. As many of you know, markets rise and fall, income levels change, and expenses fluctuate. A good retirement plan is one that is revisited every few years to account for changes at home, and in the market. Changes both good and bad can, and should, change your retirement plan. If you do not make the time to revise your retirement plan to reflect changing lifestyles, you cannot adjust for changing expectations.
The best retirement is a well-planned one. Contact us today: Our experienced team of financial advisors at Apex can help you avoid these (and other) mistakes to stay on track for a happy retirement.
Glassman, Barry. “The 5 Biggest Retirement Planning Mistakes You Can Avoid.” Forbes. Forbes Magazine, 7 May 2014. Web.