Retirement is supposed to be a time of joy and relaxation. Without proper planning and decision making while still being employed, many can end up in challenges that they least expected. Here are the top five retirement mistakes.
Many retirees rush to retirement without having a plan. Many simply say, “ Oh, I have money in the bank, or I might as well spend it while I’m living,” but this way of thinking leads to problems. The first thing a retiree should do is set up a budgeting plan on a month-to-month basis, but many fail to do so and go on vacation and extravagant dinners instead. Lifestyle adjustments are essential to living a retirement life stress free. Instead of eating out for every meal when retired, you should learn how to cook and plan meals on a daily budget. This goes the same for shopping and spending money on vacations. When you’re retired, your focus should shift from wants to needs. It’s important to create a budgeting plan that includes your daily/monthly costs, as well as having a plan set up in case of emergencies. This will help you avoid cost challenges in your daily life as a retiree.
Many people rush to cash out their social security benefits as soon as they hit the proper age. Just because you’re retired, doesn’t mean you need to cash out your benefits right away. The problem with this could be that you’ll receive less than you are actually eligible. For example, The Finance World says that if you cash out at age 62, you’ll receive 25% less than if you cash out at age 66. If you can afford to pay your bills, then there is no need to cash out your benefits for a couple years. However, you should cash them out by age 70, because this is the age that you’ll receive maximum benefits.
Paying off your home before retirement is the goal for most people. If you’re retired, you shouldn’t be making monthly payments on a home you don’t already own. But you also shouldn’t be spending a lot of money on the upkeep of your home. If your home is paid off, but you find yourself still paying a lot of costs for the upkeep of your home, it may be time to sell your home and buy a smaller one. This will allow you to downsize your monthly cost and have extra cash on hand for emergencies.
Holidays and birthday gifts, as well as loans are prime for losing money. You should not be gifting or loaning money out, because you never know if you’ll actually get it back. By the time you’re retired, your friends and family should know that you are in a part of your life that you cannot financially help them. Many retirees make the mistakes of gifting cash or giving out loans, and they never see this money ever again. This is the money that you’ve worked for all your life and now must live off it, so you can’t afford to hand it away. However, having the proper budgeting plan can allow you to plan on how much you’ll spend on gifts and loans, to help avoid losing your money.
Not Staying Active
Although retirement is for relaxing, many retirees don’t stay social and active. Retirement should be about getting together with old friends and spending time with family. It is also a time that you can do anything for yourself, such as learn a new hobby, try new things, go to new places. One of the many mistakes that retirees make is becoming secluded within their lives, which could lead to depression or higher health risks. This is terrible for the physical and mental health of humans. This is a time you should continually be feeding the mind and the body with healthy habits such as reading, socializing, and walking. You’ll live a happier and longer retirement if you do so.