The Single Most Common Retirement Planning Mistake People Make in Their 50s
Key Points
It's vital to plan for your retirement, long before you retire.
Ideally, you should aim to have multiple income streams.
Estimate your future expenses carefully and comprehensively.
- The $23,760 Social Security bonus most retirees completely overlook ›
What's the single most common retirement planning mistake people make in their 50s? I'd say that it's not reading up on retirement and how to plan well for it, so that they don't end up facing unpleasant surprises.
If you haven't planned well, here are some problems you may face: You may not have saved enough. This can happen to any retiree, but perhaps especially to those who have retired early -- without taking the time to estimate just how much they'll need in retirement -- and how they'll amass that sum.
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Pro-tip: Try to set up multiple income streams, such as Social Security benefits, dividend income, withdrawals from IRAs and 401(k)s, and so on.
Image source: Getty Images.
When you estimate your expenses in retirement, be comprehensive. Remember that you'll likely be paying for insurance, utilities, home maintenance, taxes, gifts for loved ones, travel, and so on. Keep in mind that these costs are likely to increase over time as well.
Ignoring the crazy cost of healthcare in retirement is another blunder. You can't know how much it will cost you, but you should plan to be able to pay a lot. There are also ways to keep your healthcare costs in check, such as making informed Medicare decisions.
You may not have sufficiently appreciated the volatility of the stock market. A portfolio full of growth stocks, for instance, may fall harder than value stocks in a market pullback. And an ill-timed market pullback can shrink your portfolio just when you want to take money out. (We advise keeping any money you might need within five, if not 10, years out of stocks.)
Ignoring inflation can also be costly, because over 25 years it can cut the purchasing power of your money in half -- or more. So, while you might get by on $60,000 annually today, in 25 years, that might be equivalent to trying to survive on $30,000.
For the best shot at a delightful retirement, start thinking about and planning for it well before you hit your 50s.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
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