What do you expect to feel when you retire? A general sense of fulfillment from all your hard work? Excitement about finally reaching this pivotal milestone? Regret? That last one may not make your list, but unfortunately, 55% of retirees say that’s what they experienced. (1)
Thankfully, you can learn from the mistakes of others and make changes now so that your retirement isn’t riddled with regret. Here are four common retirement regrets to keep in mind as you prepare for your golden years.
1. Retiring Too Early (Or Too Late)
Whether you are forced to retire earlier than planned or you decide 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. (2)
If you decided to retire before 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 toward Social Security, which could result in a larger benefit amount
- Health insurance coverage through your employer
- Purpose and identity
- Stronger mental and physical health (3)
On the other hand, another common regret is waiting too long to retire. If you have enough money saved and you and your financial advisor have planned for every aspect of your golden years, you should consider retiring as soon as possible. The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it. The point is this: your situation is unique. Be sure to take a good hard look at your financial situation to ensure your money will last, and don’t let your retirement fears hold you back.
2. Not Having A Social Security Claiming Strategy
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 early retirement, you will receive a reduced benefit. Your basic benefit will be reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age, up to 30%. (4)
This is why you need to create a personalized Social Security claiming strategy. Every individual’s situation is different and there is no one-size-fits-all solution. If you want to learn how to claim your benefits to maximize the amount you receive, sign up for our free Social Security 101 webinar!
3. Overspending In The First Years Of Retirement
You may have a hefty nest egg to carry you through retirement, however, you still need to exercise financial discipline to ensure your money lasts. Dipping too deep into your savings as soon as you retire could quickly break your retirement dreams. Practicing self-control to resist impulse buying and frivolous spending is important if you want to see your savings pan out as you planned them to.
However, these impetuous behaviors are not always to blame. It could be that you set a plan that sounded good on paper but just wasn’t realistic or flexible enough to allow for some stress-free splurging. So, when developing your retirement plan, 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.
4. Not Setting Retirement Goals
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. (5) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (6) 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.
Retire With No Regrets
No matter what your situation, it’s possible to enjoy your retirement without regretting the decisions you made. At Wurz Financial Services, we understand that deciding when and how to retire is a difficult decision, but we want you to know that you don’t have to make the hard choices on your own. Our top priority is to help you achieve financial stability and give you the confidence to work toward financial independence. If you want to have a regret-free retirement, schedule a no-obligation consultation by contacting us at 859-291-9879 or firstname.lastname@example.org today! Also, we invite you to join us at one or both of our free webinars:
- Social Security 101: The 3 Rules To Maximize Your Lifetime Retirement Benefits!
- Will I Have Enough To Retire?
Darren Wurz is a co-owner and financial planner at Wurz Financial Services, an independent, family-owned and operated financial services firm dedicated to helping its clients transition from their working life to a comfortable retirement with confidence. Darren received his master’s of science in financial planning from Golden Gate University and also holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation. He operates the Northern Kentucky/Cincinnati office of Wurz Financial Services and is an active member of the Covington, KY rotary club, the Northern Kentucky Chamber of Commerce, and the Covington Business Council. To learn more about Darren, connect with him on LinkedIn.