Today, a lot of Americans has little or no retirement savings even at the age of 65. More seniors now prefer to stay in the workforce longer because of financial reasons. Though going into retirement without retirement savings happen for a number of reasons, some of them are beyond our control.
But, let’s face the truth that we can’t just blame the uncontrollable reasons why our seniors go broke in retirement. There are certain actions that they made are likely to people enter their senior years with little savings to help them throughout the golden years. Here are five common behaviors that will most likely leave you broke in retirement:
It is up to you how you will use this information.
When people hear the word retirement, the first thing that comes into their mind is a vacation. Sad to say, most people spend a lot of time planning for vacation than planning for retirement. I understand that vacations are fun to have, but it would make a happier ending if you have built a stronger nest egg so you can also travel in retirement.
If you have a clear plan, you are more likely to take steps or necessary actions to put the plan into action and end up with enough investments for your golden years.
Sometimes, the loot that we have in our retirement savings is very tempting to take especially if you currently have a number of things to pay. But before you raid your retirement savings, you have to think again.
Withdrawing from any retirement account before your actual retirement will usually trigger considerable amount of tax.
Borrowing from 401(k) account is also not a good idea. This would be possibly the reason why you can’t just retire from your job because you have to repay the entire amount you owe soon as you leave your job. If you need to leave your job for some reason but can’t repay the loan, you could end up owing more than 40% of the borrowed money in taxes, depending on the state rates. You will lose a lot of money just paying the taxes from the money you owe and the money you repay with after-tax dollars. You will also lose thousands of dollars from losing the opportunity for investment gains that you could have gained.
Once you hit the age 62 to 70 years old, you will be eligible to take Social Security retirement benefits. But again, it would be tempting to take your benefits right away instead of waiting for your full retirement age.
Starting to take Social Security is a major decision. Taking it early can also mean financial disaster later in retirement. Starting early can cost you to lose you thousands of dollars because your benefits will be reduced by a fraction of a percent for each month you are short of full retirement age – and this reduction is not a one-time payment, it last for a lifetime.
Don’t forget to include healthcare costs in making your retirement budget. As a senior, you might need about $250,000 or more just to cover your healthcare needs.
When making retirement budget, don’t just consider your monthly income. Remember your costly health issues that Medicare won’t be able to cover fully. Consider getting a Medicare supplement plan to maximize your health coverage.