5 Mistakes New Retirees Need to Avoid

7:34 pm Retirement Planning

error 150x150 5 Mistakes New Retirees Need to AvoidApproximately 10,000 baby boomers retired today, and the same number will follow every day over the next few years.  A post over the weekend on the Wall Street Journal’s website detailed the 5 ways retirees can really mess up their retirement:

1.  Miscalculating when to take Social Security.  The Great Recession led many soon-to-be retirees to claim their Social Security benefits at the earliest possible time, at age 62.  Many people do this, thinking that if they collect for a longer period of time, they will collect more.  However, financial advisers say that if you live longer than age 82, you will collect more if you delay taking benefits, at least until full retirement age (65 to 67, depending on when you were born).  That larger check will become a lifesaver in your later years, when health care costs typically escalate.

2.  Spending too much too soon.  Tackling remodeling or other projects that carry a big price tag early in your retirement can cost you plenty down the road, since the first dollars you take out of retirement savings are the most costly (they won’t be there earning any future returns).

3.  Not budgeting.  The best time to create a budget for your retirement is before you retire.  You don’t want any surprises that will cause you to spend more without having a paycheck to balance.  Plus, financial advisers say that actual living expenses often go up in the first 3-5 years of retirement, so be realistic in your budgeting.

4.  Not planning for what will fill your time.  In a rush to quit a job they may loathe, many new retirees make the common mistake of not planning for how they will fill their time now that they are no longer on the job.  This can lead to depression.  Before you retire, consider test-driving your retirement by building it around activities and social networks that will sustain you in your retirement years.

5.  Moving.  Making a sudden move without the proper planning is the wrong move.  While moving to a new location is not wrong, you should check it out first by traveling there or even living there for a few months before making long-term plans.

To avoid these and other common mistakes in retirement planning, contact our Newport Beach law firm.

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