Regrets: Everybody has a few. But you certainly don’t want to reach the end of your working life to find you’re not where you want to be.
A 2018 survey by Global Atlantic Financial Group, which sells annuities, asked over 4,000 Americans, pre-retirees and retirees, about their retirement savings. Of those surveyed, 55% said they had regrets. The top three were that they:
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Did not save enough.
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Relied too much on Social Security.
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Did not pay down debt before retiring.
It’s possible to avoid some of this remorse by taking steps now, says Maura Cassidy, vice president of Retirement Product at Fidelity.
“There are tools available that can help you plan ahead,” Cassidy tells Money Talks News. “Work on a plan now, and you’ll have fewer regrets later.”
Here’s how you can avoid those big retirement regrets.
1. Not enough savings
Fidelity’s recent Retirement Mindset survey found 62% of respondents were confident about their current financial health, Cassidy notes.
But when people looked ahead to their retirement finances, that changed.
Part of the issue is planning. Only 18% of the Fidelity respondents had a financial plan for retirement. Without planning, it’s hard to know if you have enough saved.
Find out how much you’ll be spending in retirement, Cassidy says. “Sit down and think through your expenses, and amp up your savings.”
The most common financial surprises for retirees, Global Atlantic’s survey found, are inflation and unexpected medical costs.
Consider establishing a health savings account, if you qualify. It can be a valuable retirement planning tool.
Picture your retirement lifestyle and think over how you’ll fund it, says Brandon Renfro, a fee-only retirement adviser with a Retirement Income Certified Professional credential.
“Without knowing what you’ll spend money on, simply saving more is like working toward an unknown goal,” says Renfro, who also is an assistant professor of finance at East Texas Baptist University in Marshall, Texas. “Plan your savings amount around a definable goal.”
2. Relying too much on Social Security
Rather than viewing Social Security as your main source of income in retirement, Cassidy suggests looking it at one of several legs of a stool.
“There’s a lot of misunderstanding about what Social Security can do and what you’ll get,” she says. “It’s supplemental, and not designed to be replacement income.”
It’s not meant to provide all the necessities of life. Also, no one knows how Social Security benefits will change or whether the entire system will face an overhaul. Cassidy says your planning should include other resources, including: