People fail retirementbecause they have failed to do many of the right things necessary to retire comfortably and with peace of mind. Back in the 70s and 80s, retirement was simple. At 65 you left your company with a guaranteed pension, Social Security and perhaps some savings. Times have changed. Most companies have terminated pension plans and Social Security has become a maze of confusion.
Not considering long-term care insuranceis still another mistake. After all, you know you will never be that bad off. My question is, how do you know?So many people have said to me, I will just refuse to go to one of those places, Id rather jump off a bridge. Thats great, but you wont make that decision, your family will make it for you. Remember to be nice to your children, because they will decide where you are going to live later in life. Yes, long-term care insurance can be a major monthly expense, but nothing compared to the cost of assisted living that averages $4,000 per month or memory care that can average $10,000 per month.Either one can devastate your finances.
Failure to understandinflationwill eventually jump up and bite you where it will secure your attention. Our fine government will proudly tell us that inflation in 2017 is less than 2%. However, ask any retiree and they will demonstrably inform you that the government's numbers are hogwash. Seems groceries go up about 7%, utilities go up about 4% and property taxes go up more than 2% every year.The cost of health insurance goes up typically between 10% and 20%. Out-of-pocket expenses you didnt have when working, such as vision and dental coverage, are going sky high. If you ignore this basic fact of life, then you are certainly doomed. (For related reading, see: How Inflation Eats Away at Your Retirement.)
The great thing about modern medicine is they keeping coming up with ways for us to live a long life. People turning 100 is more the norm now than an anomaly. Yet so many people go on the assumption that once you hit 80, your days are numbered and you really dont need to worry about money. They reason if you retire at 65, you most likely will have only 10-15 years left to live. Big mistake!
Probably the most obvious change today from years ago is peoples vision of retirement. In the past, you may have hoped you could take that one nice trip you always wanted. Now you plan to take several trips, spend more time on hobbies, maybe start a small part-time business. The challenge here is while the dreams are terrific, no thought is given how it all gets paid for.
The issue that has always flummoxed me is people go into retirement with thousands of dollars in consumer debt. It's as if they think a fairy godmother will appear and with a sprinkle of glitter the debt just goes away. The reality is you have all this debt because you have been living above your means for years. Whats going to change now that you are retired? Do you have a plan to get that debt paid down before you retire?
All this and more is why you need to have a qualified financial advisor who can walk you through this maze and avoid the potholes and cliffs by creating a plan and making sure it gets executed and monitored. The retirement planning process should begin two to three years before you retire. Why go into retirement on a wing and a prayer?
Disclaimer: The information provided is solely for informational purposes and is not meant to be, and should not be construed as advice or used for investment or financial planning purposes. It is recommended that before making any decisions regarding financial planning or investing that you seek the counsel of a trained and certified fee-only professional.