Do you have any financial regrets as you approach retirement? If we’re honest, every one of us would have to answer “yes.” We look back over debts we incurred, foolish purchases we made, investments that went sideways or money we misspent and we can’t help experiencing a little second-guessing. The good news is that we’re not alone – and the equally good news is that, if we start early, we might be able to mend our mistakes, at least in part.
Retirement Money Regrets are Real, but They’re Not the Whole Story
In researching this important topic we came across this recent article from USA Today that provides some helpful insight into some of the financial decisions people regret the most. We’re calling these the “top five retirement money regrets” – but before we share them, here’s a word of caution. In our experience here at AgingOptions, the “life decisions” many older adults express the greatest remorse about often have little to do with money. This USA Today article deals entirely with financial decisions, but the truth is that money is only one facet of successful retirement planning, and plenty of retirees who have all the money they need end up unhappy in retirement because they failed the planning test. We’ll share more about what that looks like in a moment.
Writing about retirement money regrets in USA Today, here’s how financial columnist Russ Wiles introduces the subject. “Life is filled with choices, and some of them will lead to regrets,” he writes. “That’s certainly true in the financial area, where Americans routinely grapple with difficult decisions. Most everyone has financial regrets (if they’re being honest).” Wiles based his article on this analysis just published at Bankrate.com that put the topic of financial regrets into perspective. “When it comes to their personal finances, Americans largely wish they could go back in time and do some things a bit differently,” Bankrate reports. In its Financial Security Index survey for May 2019, researchers found that “more than three out of four Americans (or 76 percent) say they have at least one regret when it comes to their finances.”
The Top Five Retirement Money Regrets
With that in mind, let’s see what we all feel so badly about – starting with:
- Taking Social Security Too Early. While there might be good personal reasons to start taking benefits as soon as you can – job loss, medical bills, or a health crisis, for example – waiting is almost always the better strategy since benefits rise at about 8 percent per year from age 62 until they peak at 70. “In a study released this month by MassMutual,” says USA Today, “38 percent of respondents now collecting Social Security said they wished they had waited longer.” Sadly, about 60 percent of the 700 study respondents “admitted that they didn’t receive advice before making this key decision.”
- Waiting Too Long to Start Saving. Savings-related regrets dominated the Bankrate list and not starting soon enough was the number one financial failure people cited. “Regrets about not saving early for retirement grow more pronounced with age, according to the study,” says the USA Today “Unfortunately, the older people get, the more difficult it is do anything about it by boosting incomes.” Saving for retirement wasn’t the only mistake people wish they could do over: about one-fifth regretted their failure to save for emergencies (see below), and ten percent cited failure to save enough for their kids’ education.
- Being Too Conservative. “Retirement planning is a long-term pursuit, often spanning three decades or more,” says Russ Wiles in USA Today. The investment strategies that are suitable for someone in their 40s are probably unwise for those closer to retirement. Play it too safe and your retirement income won’t be enough to keep pace with inflation. Invest too aggressively and you’re threatened by market downturns. This is where a retirement dashboard created by an objective, professional financial planner can be an invaluable tool. Call us at AgingOptions to find out more.
- Withdrawing Retirement Funds Unwisely. Here again, sound professional advice is extremely important – otherwise you may risk depleting retirement funds too quickly or unwittingly putting yourself in a higher tax bracket due to imprudent withdrawals. “By planning ahead, you could time some of those IRA withdrawals to occur in years when you might be able to minimize the tax bite,” says Wiles.
- Failing to Establish a Financial Cushion. “Lacking a rainy-day fund wouldn’t seem to be a retirement problem nor a regret but it can be,” says USA Today, “as not having emergency funds can trigger a chain reaction of negative consequences.” This article from CNBC that appeared in 2018 reported that “only 39 percent of survey respondents said they would be able to cover a $1,000 setback using their savings.” This is a particular problem for retirees who often pull money from retirement accounts to cover unplanned emergencies, putting their future security at risk.
Don’t Over-Emphasize Retirement Money Regrets and Ignore Proper Planning
Like we said at the outset, focusing on retirement finances is important, but it’s not the whole story. What’s needed is an overarching retirement plan that is comprehensive and multi-faceted. You may have confidence that your financial needs will be met over the coming ten, twenty or thirty years – but do you have adequate legal protection in place, which is more than a simple will? Is your family fully aware of your hopes and desires as you age and will they be there for you? Have you considered your best options for medical coverage and your best housing plan, so you’re prepared for whatever the future may hold? If this seems like a lot to accomplish, we have terrific news: all these components are part of an AgingOptions LifePlan, a uniquely comprehensive, robust retirement planning strategy. Only AgingOptions offers it.
Why not make it your goal this month to find out more by attending a free LifePlanning Seminar with Rajiv Nagaich? Let Rajiv show you the process and answer all your questions in a lively, information-packed session – then the next steps will be up to you, with no obligation and no pressure. Visit our Live Events page for a current calendar of seminars, and then register for the date of your choice. Let’s make this the season of your life when you really begin the journey toward the retirement you’ve always dreamed of enjoying. Put those retirement money regrets to rest, and age on!
(originally reported at www.usatoday.com)