3 Retirement Decisions You Could Regret in 5 Years

For older Americans, there's good news and bad news. The good news is that many retirees are living longer than ever. The bad news is that when your retirement money has to support you for longer, you need to be more strategic.

Decisions that you make early in retirement will affect whether your income is sufficient later in life. That's why you want to make sure you avoid these three decisions in early retirement, because you're very likely to end up regretting them after a few years have passed.

Image source: Getty Images.

1. Claiming Social Security too early

Claiming Social Security early is one decision you're very likely to regret, because an early claim reduces your monthly benefits for life. The government sets a full retirement age, and if you start collecting Social Security before that FRA, your benefits will be reduced. If you claim at 62 instead of an FRA of 67, the reduction will be 30% of every monthly payment.

An early claim also means you forgo the opportunity to earn delayed retirement credits, which could increase your standard benefit by as much as 24%. If you give up the chance to maximize inflation-protected guaranteed lifetime income, it could very quickly become a major source of regret as you find yourself struggling to bring home enough income later on in retirement.

Before you start receiving benefits, make sure you understand the amount you'll collect each month, how your claiming choice affects that amount, and what other income you'll have coming from retirement plans to supplement Social Security.

2. Withdrawing too much too fast from your retirement plans

Taking too much money out of your retirement plans too soon is another decision that you could end up really regretting.

While experts traditionally recommended following the 4% rule to decide how much to withdraw, you should make a personalized plan based on your age, investment balance, retirement goals, and risk tolerance. Also consider factors like your health status, and what you think your chances are of living a long time.

Whether you choose to follow the 4% rule or to be more (or less) conservative, you want to make sure you have a strategy in place to avoid withdrawing too much too fast. Otherwise, you could drain your retirement plans and won't have investment income to supplement Social Security later in life. Since Social Security only replaces about 40% of preretirement income, that's a big problem.

3. Trying to maintain a lifestyle you can't afford

Finally, keeping up a lifestyle you can't afford is a major mistake.

If you go into debt, drain your savings, or make withdrawals that are too big to fund your lifestyle, you'll be jeopardizing your future security. The last thing you want is to spend so much early on that you go broke later when you have health needs you must pay for -- and when it's way too late for you to return to work.

If you don't have enough Social Security or savings to comfortably cover your costs, then reducing spending should be a top priority. Do it at a younger age by choice, rather than at an older age when it's too late.

You don't want to be left with these regrets, so think carefully about whether the decisions you're making today are setting you up for a secure tomorrow.

The Motley Fool has a disclosure policy.