No one’s good at anything the first time they do it- think golf, skiing or cooking- but what if you are trying something for the first time and you cannot afford to fail? That’s the question Rodney Brooks of USA Today addresses in his article, “7 big mistakes to avoid in first year of retirement.” Sometimes you’ve got one shot and you’ve got to make it count. So if you have recently retired, Brooks offers several tips to help ensure you don’t make what he calls “rookie mistakes.”
Brooks has set out to unravel the mystery of a successful retirement. To do this he asked several financial experts to give their suggestions. The good news is they had several great ideas and they generally agreed on the most important ones.
1. Have a strong financial plan
Most of us have a budget while we are working. We know our income and our expenses. If things get out of sync it’s time to step back and make a few changes and right the ship before it’s too late. Why should retirement be any different? According to nearly every expert, the key to a successful retirement is to have a good plan.
A recent survey by the Benefits Research Institute reports that only 42% of workers try to calculate a budget before going into retirement. The other retirees fail to construct a plan or even talk to a financial planner, something which experts suggest doing BEFORE retiring. You may have several options to establish a strong financial position, but it’s important to make changes while you have an income. For instance, some planners might suggest paying off your mortgage or reducing expenses.
2. Do not spend too much
Not spending too much has become critical for many retirees, especially those who saw their nest egg depleted during the financial crisis. In order not to spend too much you will have to have a good budget listing not only fixed expenses but also discretionary expenses. Be realistic. You may have thought retirement would mean you could travel and shop, and you might still have that option, but overspending can create debt, limiting your options.
3. Delay Social Security
Although you can receive your SSA retirement benefits as early as 62 years of age, some retirees should consider delaying benefits as long as possible. For instance, if you can wait your benefits will increase 8% each year between ages 66 and 70.
4. Not having adequate healthcare options in retirement
Whether it’s planning long-term care options or making sure you have a good insurance plan, failure to plan for the inevitable healthcare costs you will have can seriously deplete your retirement savings. Unfortunately, failing to plan well for your healthcare can not only jeopardize your own finances, but it can also hurt your family who is often called in to help take care of you.
Experts have good news. They believe if you take the right steps listed above, talk to a financial planner before your retire, and start saving for retirement as soon as possible, it’s possible to have a comfortable retirement.
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