If you’re not ready for your approaching retirement, you’re not alone. Many people quickly change the subject when asked about retirement planning because the idea fills them with anxiety.
There are many reasons why talking about retirement is an awkward subject, but the main one is that only a small percentage of the workforce receive a pension. Consequently, they must count on a combination of savings and Social Security checks to cover their living expenses during their retirement years.
Unfortunately, both these sources of income are problematic. It’s hard to set enough money to outpace inflation at current interest rates and the future of Social Security is uncertain.
5 Common Mistakes
Your best option to retire comfortably is to avoid making expensive mistakes. Here are four mistakes that could limit how much money you have available for your retirement.
Retirement Mistake #1: Leaving your family with funeral expenses
Is there a way to relieve your family of the financial burden of your funeral expenses?
PolicyZip suggests buying final expense insurance, which will cover funeral costs that range from $7,000 to $12,000.
The steps to verify if this policy is a good fit for you are fairly simple:
First, meet with an independent insurance agent, enroll in a plan you like, and then decide on a beneficiary, the designated person who will receive your policy’s death benefit proceeds.
Next, document the policy number with your estate planning documents and file your policy in a safe place. It’s a good idea to also give a copy to your beneficiary.
Finally, update it every five years.
Retirement mistake #2: Owning more vehicles than you need.
During the course of your working life, your family may have needed more than a single vehicle. As a result, it’s not uncommon for an elderly person to have one or more extra vehicle.
But if you don’t need your extra cars, motorcycles or RV, then you have a few options: You can sell them, give them to your children or grandchildren, or donate them to a charity as a tax-write off.
Keeping these vehicles does more than take up space. They also drain your savings because you’ll have to pay for insurance, gas, and repairs.
Retirement mistake #3: Expecting to always stay healthy and fit.
When you’re healthy and fit, eating right, exercising regularly, and getting plenty of rest, it’s hard to imagine that you’ll ever be ill.
Unfortunately, the future is uncertain and may need expensive medical services at some time. So even if you enjoy excellent health right now, stay safe by discovering a financial strategy to help pay for any medical costs after retirement.
Fidelity Investments estimate that a 65-year-old couple will incur about $240,000 in medical costs.
Retirement mistake #4: Overestimating your Medicare benefits.
Although Medicare after age 65 reduces health care costs, it doesn’t cover all medical problems.
Co-payments and deductibles can begin to add up and you may have some out-of-pocket drug expenses. Additionally, Medicare does not cover all your needs when you’re in hospital.
The best way to cover gaps in Medicare is to get supplemental health insurance coverage.
Note: not all states have the same medicare coverage rules – get to know your benefits.
Retirement mistake #5: Not planning on long-term care.
You must either buy long-term care or make a plan to have someone care for you if you can’t live independently at home.
While Medicare does fund assisted living, your assets must be low enough to qualify for this option.
Don’t Procrastinate on Your Retirement Planning
Although it’s easier to avoid planning for retirement than actually taking the necessary steps to retire comfortably, speaking to a retirement advisor will help you figure out exactly what steps to take.