Over the last few years, economists and financial planners have warned about an impending retirement crisis in the United States. The Great Recession revealed many alarming facts about how unprepared Americans are in terms of financial planning as they approach their golden years. Two statistics that illustrate how dire this situation can become include:
- Most individuals currently in their 40s have only saved up about $31,000
- Most elderly couples have access to only $100,000
There is a clear need for retirement planning these days, but individuals should also keep in mind that making mistakes during the planning stages could be detrimental later in life. To this effect, here are five mistakes that should be avoided.
1. Waiting Too Late to Plan
It is never too early to start planning for retirement, but there is a great risk in starting too late. The biggest misconception is that you will be able to continue working well into your 70s. The reality in 2018 is that few Americans are able to continue working past the age of 67. The longer you wait to plan for your retirement, the greater the challenges you will face in securing your finances.
2. Not Cutting Down on Expenses
You should not assume retirement will automatically make you a more frugal person. Most people fall into a more active pattern of spending during the first years of their retirement, particularly if they did not spend enough time discussing this matter with a financial planner. San Diego residents should strive toward cutting down expenses by 50 percent after retiring, and they will only be able to achieve this with a solid plan.
3. Not Considering Longevity
Looking at trends in aging among American families, there is a good chance you will outlive your parents as you get older. Two generations ago, Americans only lived 10 years into retirement. These days, retirees could easily live 20 years past their retirement age, which makes financial planning an even more crucial matter.
4. Delaying Estate Planning
Many people who believe retirement planning should be done at an early age will not exhibit the same attitude toward estate planning. If anything, estate planning should come before retirement planning because no one knows with certainty if they will live another day. A lack of estate planning can saddle surviving spouses with unexpected costs and expenses that could derail their retirement plans. Estate planning includes more than just wills and trusts. It should also feature power of attorney and health proxy directives.
5. Not Speaking with a Financial Planner
Individuals who get an early start on their retirement planning are more likely to handle lifestyle changes gracefully later in life. Don’t be afraid to ask a financial planner about what life might be like for you during retirement.
If you need a reliable financial advisor, Jan Gleisner can assist you. With over 16 years of experience in the financial services industry, Jan Gleisner is your most trusted choice for financial planning in San Diego. Reach out today to learn more.