Have you ever asked yourself “am I prepared for retirement?”
Do you have the courage to know what your answers will be? If you not, then you are not yet prepared and confident with your retirement plans. According to Phyllis Garratt, a certified financial planner with Meritas Wealth Management in Larkspur, California. “People are so fearful they don’t even want to think about it, but not doing anything is the worst mistake you can make.”
So what can you do? Of course, you have to face your fears and prepare, save and prepare as much as you can while you still have time! Make necessary adjustments and tweak your retirement plans to make it better and updated. In doing so, here are five biggest retirement mistakes you should watch out and never make:
It is a grave mistake to underestimate health care expenses in retirement! Yes, you are healthy, I get it. I understand that since you are healthy and fit right now, thinking about your health in retirement is somehow hard and seems impossible that you will get gravely sick. Being struck with a disease or illness is inevitable. You can be healthy right now and very sick tomorrow.
Relatively, people also tend to overestimate the coverage provided by Medicare. But the truth is, Medicare doesn’t cover all your healthcare needs. You will still have to face about 20% out-of-pocket healthcare expenses which can get heavier in the long run.
What you can do: Plan and save early. Take a look at your medical history and then do the math. According to A recent Fidelity, the study found that a couple retiring this year would need $275,000 to cover their health care premiums, copays, deductibles, and out-of-pocket costs for prescription drugs over the course of their retirement. If you haven’t thought about that early, it is time to go back to your retirement plans.
Make sure that you’ll include in your budget the money needed to pay for additional health coverage premiums like in Medicare. Since Medicare is not enough to cover all your healthcare needs, consider getting a Medicare supplement plan. Get Medicare supplement quotes while you are still planning so you can estimate how much you will need for this additional premiums.
Retirees often succumb to “Im-free!” factor making them set on a spending spree to treat and indulge themselves after long years of being in the stressful workforce. New retirees often spend more instead of less only to know later that they are way over their budget.
What you can do: Prepare a retirement budget ahead of time and firmly stick to it. As much as possible, anticipate other expenses that you would like to do such as traveling and include them in your budget. Once you retire, you are solely in charge of your finances, try to balance it now that you have more free time.
Most people tend to underestimate their daily needs in retirement. During planning, they thought that they would spend less and need less. But that is not always the case. You will still like doing the things that you like doing before retiring. What is cheap yesterday may not be when you retire.
What you can do: Plan realistically for the possibilities. Do you have dependents? Do you have places that you want to go to? Do you have hobbies to pursue? How much you spend daily on food, clothing, bills, etc.? On top of your anticipated costs, also plan the ones that you might not anticipate or miscellaneous expenses.
Take this as a warning to help you avoid some grave mistake as you make your retirement plans. It should set you off a good start! Good luck!