These are the top five common retirement mistakes that can lead to financial difficulties or failure during retirement. Hi, I’m Alex Wolfe, Certified Financial Planner and Head of Financial Planning at Base Wealth Management. In this video, I’m going to share the top five mistakes people make when it comes to their retirement. If you’re serious about your financial future, hit subscribe and like this video to get our latest content.
1. Reducing Retirement Expenses Many people underestimate how much they will need to cover expenses during retirement. Common misjudgments include not accounting for rising healthcare costs, inflation, or lifestyle changes like traveling or hobbies. This miscalculation can lead to running out of money sooner than expected. To avoid this mistake, individuals should create a detailed retirement budget and considering both essential and discretionary expenses plan for increasing health care and inflation costs.
2. Relying too much on Social Security. Some retirees rely too heavily on Social Security benefits as their primary source of income. While Social Security provides important support, it is often insufficient to cover all necessary living expenses, especially for those accustomed to a higher living standard. Over-reliance on Social Security without additional savings or income streams can leave retirees struggling financially. Planning for multiple income sources such as retirement savings accounts like a 401k or IRA, pensions, part-time work, can help bridge that gap.
3. Failing to save early or consistently. Many individuals lay saving for retirement either due to other financial priorities or the misconception that they will catch up later. However, waiting too long to start savingn means missing out on the power of compounded growth, which can dramatically boost retirement savings over time. Additionally, inconsistent savings habits can lead people with insufficient funds. To prevent this, individuals should start saving for retirement as early as possible, ideally contributing regularly to tax-advantaged retirement accounts and take advantage of the employer-matching contributions if available to you.
4. Poor Investment Strategy or Being Too Conservative or Too Risky Some retirees make the mistake of being too conservative with their investments, especially in their early retirement years, or conversely, too risky. While avoiding excessive or too much risk is important, being overly cautious by keeping too much in low-yield assets like cash or bonds can result in insufficient growth to combat long-term inflation or sustain long-term retirement. On the flip side, taking too much risk with aggressive investments close to retirement can lead to significant losses if there’s market declines. A balanced investment strategy that considers both your risk tolerance and time horizon is essential.
5. Neglecting healthcare and long-term care planning One of the most costly mistakes is failing to plan for healthcare and any long-term care needs. As people age, medical expenses often increase and long-term care services such as nursing home or in-home assistance can be extremely expensive. Without proper planning, these costs can deplete retirement savings quickly. Purchasing long-term care insurance or setting aside funds for medical care and those related expenses can help retirees avoid financial strain due to unforeseen health issues.
In summary, you’re going to want to avoid these common retirement mistakesnon Social Security, delaying savings, mismanaging investments, and neglecting health care planning. These can lead to significant possibility of failure during retirement and you want to make sure that you ensure a successful retirement. I’m Alex Wolfe, Certified Financial Planner. Please visit our website basewealthmanagement.com to learn more and also check us out to see if you’d like to schedule a meeting with us. We’ll catch you on the next one.