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Five Common Regrets in Retirement

Five Common Regrets in Retirement

| October 19, 2017
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If you’re like more than half of Americans, you are probably excited about your retirement years. (1) It’s a milestone that we often start thinking about as soon as we enter our working years, and many of us relish the idea of slowing down, changing pace, and finally having all the time we need to pursue passions and invest in relationships. But what happens when you get to retirement and it’s not all it’s cracked up to be? Have you considered the idea that you could regret your decision to retire? Here are five common retirement regrets to keep in mind as you prepare for your golden years.

1. Claiming Social Security Too Early

Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you choose to collect these benefits will impact the amount of benefit you receive.

Full retirement age (FRA) changes based on the year you were born. For those born in 1937 and earlier, FRA is 65. After 1937, two months is added each year until FRA becomes 66 for those born between 1943 and 1954. Starting in 1955, two months a year is added again until the FRA becomes 67 for those born in 1960 or later.

If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive your full Primary Insurance Amount, which is the full benefit that you have earned, but if you choose or are forced into an early retirement, you will receive a reduced benefit. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age, up to 30%.

2. Overspending

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. Instead, 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.

3. Not Planning For Your Free Time

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 plan ahead to fill your time with activities that will fulfill you, you can avoid the negative emotions that can come with this 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. (2) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (3) 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.

4. Retiring Too Soon

Whether you were forced to retire earlier than planned or you made the decision 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. (4)

If you decided to retire prior to turning 65, you probably had 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 off of your money. 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 towards Social Security which could result in a larger benefit amount
  • Health insurance coverage through your employer
  • Purpose and identity
  • Stronger mental and physical health (5)

5. Not Relying On A Financial Professional

Studies show that people who work with an advisor are more likely to feel less stressed, more confident in their savings, more knowledgeable about their retirement opportunities, and more conscious of their spending habits. (6) But unfortunately, 62% of Americans don’t work with a financial advisor of any kind. (7)

Even if you are an educated, savvy investor, getting a second opinion from a professional never hurts. An advisor may be able to see trouble spots in your finances or guide you to resources that will help you decide when and how to retire. If you want to avoid facing these common regrets when you retire, call us at 985-605-7185 to schedule a phone appointment or face-to-face meeting.

About Jeremy

With nearly two decades of experience in the financial services industry, Jeremy Smith serves as a dedicated and knowledgeable financial advisor and the founder of Harbor Wealth Management. He specializes in serving retirees, pre-retirees, small business owners, and widows, providing a comprehensive array of investment management and financial planning services. Jeremy aims to serve his clients as a financial guide who is here for their every need, helping families find lasting solutions so they can focus on what matters most to them. To learn more about Jeremy, visit www.myharborwm.com or connect with him on LinkedIn.

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(1) https://commercial.bmoharris.com/resource/wealth-management/whats-your-retirement-game-plan/

(2) https://commercial.bmoharris.com/resource/wealth-management/whats-your-retirement-game-plan/

(3) http://psycnet.apa.org/journals/pag/28/2/578/?_ga=1.177767717.1281536077.1488342343

(4) https://www.cnbc.com/2014/08/21/retirees-go-back-to-work.html

(5) http://www.medicaldaily.com/planning-retiring-early-consider-these-5-health-risks-first-247669

(6) https://www.franklintempleton.com/en-us-retail/investor/approach/firm/press-article.page?DocID=ig61ca9z

(7) http://news.northwesternmutual.com/planning-and-progress-study-2016

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