August 24, 2023

The Top 7 Retirement Planning Mistakes (And How to Avoid Them)

Retirement is a significant milestone that promises relaxation, exploration, and freedom from the daily grind. In order to make the most of your golden years, it is crucial to avoid common mistakes that could derail all of your hard work and years of diligent saving. In this blog post, we'll explore some of the most prevalent retirement mistakes and offer guidance on how to avoid them.

1. Neglecting Financial Planning: One of the most significant missteps is underestimating the importance of financial planning for retirement. Failing to save adequately or not understanding your retirement accounts and investments can lead to financial stress. To avoid this, start planning early, set clear financial goals, and consider consulting a financial advisor to ensure you're on the right track.

2. Overlooking Healthcare Costs: Healthcare expenses tend to rise as we age, and many retirees underestimate these costs when planning for retirement. To maintain your finances, you need to account for potential healthcare costs, including insurance premiums, prescriptions, and long-term care. Talk to your financial advisor about the best health insurance options, thoroughly explore and understand Medicare coverage, and create a buffer in your retirement savings to cover unexpected medical costs.

3. Premature Social Security Claims: Claiming Social Security benefits too early can result in a reduced monthly payout for the rest of your retirement. You can start claiming as early as 62, but waiting until your full retirement age (typically between 65 and 67) can significantly increase your benefit amount. Consider your financial needs, life expectancy, and other income sources before deciding when to claim.

4. Ignoring Inflation: Inflation erodes the purchasing power of your money over time. You must account for inflation in your retirement planning to avoid a shortfall in funds later. When estimating your retirement expenses, factor in an inflation rate to ensure your savings sustain your lifestyle throughout your retirement years.

5. Poor Investment Decisions: Retirees often make the mistake of being too conservative or aggressive with their investments. Being overly cautious might lead to lower returns, while excessive risk-taking could result in substantial losses. Balance your investment portfolio with assets that align with your risk tolerance and financial goals. Regularly review and adjust your investments as needed.

6. Underestimating Post-Retirement Expenses: Retirement doesn't necessarily mean a drastic expense reduction. While some costs may decrease, others, such as travel, hobbies, and leisure activities, may increase. Failing to plan for these post-retirement expenses can disrupt your budget. Create a realistic retirement budget that accounts for both essential and discretionary spending.

7. Neglecting Estate Planning: Estate planning is often overlooked, but it's a crucial aspect of retirement preparation. Without a proper estate plan, your assets may not be distributed according to your wishes, and your loved ones could face unnecessary financial and legal challenges. Consult with your financial advisor and attorney to update your will, establish trusts, and ensure your beneficiaries are appropriately designated.  

Retirement should be enjoyable and fulfilling, free from the stress of avoidable financial mishaps. Recognizing and avoiding these common mistakes can set you up for a more secure and comfortable post-career life. Start planning early, seek professional advice, and remain flexible in adapting your strategies as circumstances change. Your retirement years can be the most rewarding yet - that is, with proper preparation and thoughtful decision-making.

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Every Day is Saturday

Our job begins where most advisors stop—saving money is great, but how do you spend it without risk in retirement? Welcome to Every Day is Saturday with Brad Gotto and Matt Stahl, partners and private wealth managers at Fiat Wealth Management.

In this podcast we help guide you to think about your money in a practical sense and make the boring and complex financial decisions, fun, informative and educational. Join us on this journey where Brad and Matt will explore different strategies on how to spend your money without guilt and have peace of mind knowing you are spending it the optimal way in retirement.

You’ve saved money for a lifetime. Now it’s time to spend it.

In Spending Money and Having Fun, Retirement Income Certified Professional Brad Gotto teaches you how to be smart about spending so you can stop worrying and live the life you want. Old habits are hard to break, but Brad helps you embrace the counterintuitive and build new habits to support your next chapter. You’ll learn how to:

  • Change your mindset around spending

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