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Retirement Planning

4 Common Mistakes Retirees Make

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By: Trent Grzegorczyk

Your retirement should be relaxing and as worry-free as possible. However, many Americans get caught making mistakes as they enter their golden years, which can result in some financial burdens. Avoid these 4 typical mistakes retirees make at all costs, and make sure to dial in your retirement plan with an expert sooner rather than later.

4 Post-Retirement Money Mistakes

1. Taking on too much risk

The investment strategy used to grow your retirement savings is often not the same strategy that you want to use as you take distributions from your portfolio. In general, retirees should consider a more resilient and stable investment strategy that is more focused on protection and income generation as opposed to high growth and speculation. One of the worst case scenarios that could happen is that your portfolio takes a big hit the year you retiree. This can really impact the long-term sustainability and you could risk depleting assets too soon. Review your asset allocation and get familiar with how much risk you should be exposed to in order to reach your goals. The idea is to keep a balance between growth and stability so that you aren't jeopardizing your retirement by taking on too much or too little risk. Vanguard has a great risk tolerance questionnaire so you can determine how you might want to consider allocating your retirement savings.

2. Applying for Social Security too early

It's common for folks to think that if they retire early that they should take their Social Security retirement benefits (SSRB) as soon as they are eligible. While this can make sense for some retirees, more often it's not the best strategy. If you have sufficient retirement savings in an IRA or 401(k) you should consider bridging any income gaps with distributions from those accounts as opposed to taking SSRB. This way you can let your SSRB grow at 8% each full year that you wait until age 70. Make sure to grab your benefits estimates by heading over to SSA.gov.

3. Not forecasting your retirement numbers

Many retirees might feel like they have a grasp on their retirement numbers, but in reality all they have is a guess. Gone are the days of basic retirement spending calculations. Expert retirement planners now have access to very sophisticated retirement forecasting tools like eMoney. While there isn't any guarantee using these high tech planning tools, they can provide much better guidance and reassurance than say the old 4% rule. If you haven't gone through a comprehensive retirement planning process with your advisor using tools like this, you should. This way you'll have a plan built with logic and state of the art technology as opposed to going with simply what "feels right". 

4. Delaying retirement

Most people think that 65 is the only option when it comes to picking a retirement date, and this is far from the truth. With a little planning early on, you'd be shocked on how much earlier you might be able to retire. You can use our retirement calculator to give yourself a quick idea. Yes, you might have to adjust your budget to accommodate this, but what if you could retire at 60 instead of 65? What are those extra five years of relaxation and worry-free lifestyle worth? Priceless. An early retirement might not be for everyone, but it does make sense for many folks we help.

Want to get all of this dialed in without the stress or overwhelm? The sooner you seek expert guidance, the better.

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