One of the scariest things about retirement is that, for some people, it signals the end of them earning money. They’ll have to find a way to live on their savings for the rest of their lives. While this concept has shifted a bit with more people working past the age of 65 than ever before, some of the mistakes that people make are still the same. Unfortunately, these mistakes can lead to a decrease in their quality of life. Some of these decisions are made prior to retirement, and others happen once these folks have left the workforce.
Underestimating How Much Money They’ll Need Post-Retirement
This is one of the worst mistakes that anyone can make. It’s like setting a goal and then reaching it only to find out it granted you no benefit to get there. The problem in this situation is usually that people don’t adjust their financial goals pre-retirement to help cope with inflation and other factors post-retirement. A good rule of thumb here is to always shoot for a number that’s way above the average that people are anticipating they’ll need to retire. Otherwise, inflation can really do a number on your savings.
Mismanaging Their Budget Within Retirement
Live below your means is one of the best lines that people give retirees. It can be really hard to accept, though, that you’re going to have to downgrade your lifestyle once you exit the workforce. That goes back to the first point, however. If the numbers just don’t add up, and you keep spending money like you’re earning the same paycheck every month, the cash is going to run out. Obviously, it’s important to put more money into savings pre-retirement, but it’s equally as vital to plan an adequate budget once you’ve exited the workforce.
Bad Investment Decisions
That monkey NFT didn’t quite grow in value like you’d hope it did, did it? This is another one of those tough situations because sometimes people hit bad financial breaks with investments when they don’t have enough time left in the workforce to make up for some of those losses. This is an issue that a lot of people who have bought some sketchy bonds are having to deal with at this point. In the post-pandemic world, some retirees also had to contend with that massive economic drop just before exiting the workforce. The sad truth about this is that no one is truly immune from these mistakes.
Not Being Prepared to Handle Medical Expenses
Never let your insurance lapse, and always read the fine print on those contracts. As people get older, their need for medical attention typically grows as well. There are different ways to be prepared for a medical emergency. People who are very proactive set up separate funds for these types of situations, even if they have medical insurance. You never know what you’re going to get from some of these insurance companies out there. As a general rule, it’s always a good idea to pay whatever premium you need to pay for decent insurance. Again, it becomes more of a necessity as the years pile on.
No New Income Source Passed 65
It’s not that you have to continue in the workforce. However, you could at least invest in some stocks that pay dividends over the years. That’s one of the best ways to have that extra money from time to time. Plus, a lot of these companies are some of the more stable in the market. Interest rates on the money that you already have in the bank could be another income source. Of course, if you have a side business, that works as well. It can be really hard to have a decent retirement when you make no “new” money past the age of 65!
