Retirement Planning Mistakes You Might be Making, Part Two

In our last blog, we discussed a few common retirement planning mistakes. The most obvious one, of course, is not saving enough for retirement. But since there are plenty of other mistakes you might be making, we decided to turn the focus to those. This week we’ll review a few more common mistakes, and help you avoid some of the biggest pitfalls of financial planning.

Neglecting “the talk”. It can be difficult to bring up financial issues with your spouse, especially if you fear starting a fight. But if your goals aren’t in alignment, it will be difficult to come up with a detailed retirement plan.

Avoiding the estate planning process. Planning for the rest of your life is important, but it’s equally important to plan for your death. You also need a living will, and you should choose a health care proxy. Otherwise, it could become difficult to protect your assets in the event of a serious illness or injury.

Failing to plan for long-term nursing care. In one survey, about a third of Americans estimated that they will pay about 400 dollars per month for home health services. But the actual median cost for those services is $3,813 per month! As you can see, many of us are underestimating the future cost of long-term care. And since 70 percent of Americans over age 65 will someday need some form of long-term nursing care, this expense should be a part of every retirement plan.

Not setting aside a rainy day fund. Even the best budget can be broken by one adverse event. If you need a major car repair, the roof starts leaking, or some other calamity befalls you, how will you pay for it? Make sure to have some emergency cash on hand so that you don’t have to take extra money from your retirement fund, and throw off your distribution (and income) plan.

Helping your adult children. Gifts are one thing, but by the time you retire, you should resist the urge to rescue adult children from all of their misadventures.

Overlooking tax consequences. Many retirees are surprised with a large tax bill during the first tax season after retirement. This is because some types of income are taxed differently than others. Working with a skilled financial advisor can help you learn what to expect, and take the necessary steps to avoid excessive taxation.

Making the wrong decisions about Social Security. Depending upon when and how you file your claim for Social Security benefits, your checks can vary significantly. This is a decision to consider carefully, because it will affect you for the rest of your life. We have experience guiding people through this complicated process. Before you file for Social Security benefits, or make any other permanent retirement income decisions, schedule an appointment with us to review your plan. We can help you identify the options that work best for your situation.