Retirement planning is very crucial, especially for seniors. It includes managing all our investments, savings, 401k, IRAs and other assets.
As we near our retirement age, we want to make sure that the risk factors involved with our investments are lessened. We all make mistakes, but the most important part is identifying and catching them early before it’s too late to repair the damage.
Here are the biggest retirement planning mistakes people make:
Missing Out on Employer Matching
Trusting The Wrong Person
Retiring Too Early
Misunderstanding Medicare and Social Security Benefits
Borrowing Money From Your Retirement Plan
Tapping Your Home Equity Too Soon
Start planning for your retirement early. It’s unbelievable that despite the current economic situation, people are still overspending. According to statistics, the average American lives beyond his/her means, which is why Americans are drowning from credit card debt.
Think long-term. Save now and spend only on necessary things so you can enjoy your retirement years, otherwise, you will be working the rest of your life.
If you are not taking advantage of the matching 401k contributions by your employer, you are making a big mistake. You should not let this opportunity pass. It’s free money after all.
When it comes to your money, make sure you are getting the best advice possible. There are a lot of people out there who claim that they can double or triple your money in no time, but how sure are you that they are trustworthy? It is very important that you entrust your money only with someone who is credible and very experienced. The best way would be to consult or hire an experienced retirement specialist with at least 10 year’s experience. Remember, poor choice of financial adviser or retirement specialist can seriously affect the amount your investments earn.
People tend to be so excited to retire early, without really taking enough time to plan for their retirement and think about the many risks they will be facing. The obvious challenge of retiring young is, knowing whether you have enough savings and investments that will last you a lifetime. This is very tough, as no one really knows just how long a person might live. If you want to retire young, that’s not an issue, but just be 100 % sure that you have a strong game plan in place. Read Ready To Retire to get retirement planning tips.
A common misconception is that Medicare and Social Security will pay for the entire medical and healthcare needs of seniors when they reach the age of 65. This is not true. The truth is Medicare will only cover short-term acute and rehabilitative costs. The government will not cover everything unless you are considered poor. A senior can be considered poor when all of his or her asstes have been depleted, thus not having any other means of paying for senior care.
If you are unsure whether or not you’ll have enough money to pay for all your health care needs, you may want to consider purchasing a secured long term care insurance or a Medicare supplement policy.
A lot of people treat their retirement plan as a savings account, which is a big no- no. If you are under 59 ½ years of age and thinking of withdrawing funds from your retirement plan, think twice. This will cost you a lot. You will be charged an early withdrawal penalty of 10% plus pay the taxes on the money you withdraw. However, there are several exceptions to the 10% additional tax for early distributions. Contact your tax adviser to find out if you qualify, before you withdraw from your retirement plan.
Getting money through home equity loans or reverse mortgages may not be a wise decision as you might need to do this later on to cover for your long-term care needs
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About the Author: Catharine D. Allado is a Senior Care Expert and the COO of SeniorCareHomes.com – A trusted and comprehensive online directory of Senior Care Homes such as Assisted Living, Nursing Homes and other types of Senior Housing in California, Florida, New York, Arizona and the rest of the United States. SeniorCareHomes.com also provides FREE Assisted Living options to help seniors and families find the best Senior Housing on the planet!
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