The Top 4 Regrets In Retirement

August 16, 2019
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Most of us have things in our past that we regret, whether it’s wishing you had worked harder in college or regretting how much you spent on your newest car. The problem with regret is that we can’t change the past—we can only take the lessons we learned and move forward. 

I want to give you a leg up and share the lessons I’ve learned from helping countless clients prepare for and enter retirement so you don’t regret anything when you reach this milestone! Take a look at these four common retirement regrets and do your part now to avoid them.

1. Retiring Too Soon (Or Too Late)

Whether you are forced to retire earlier than planned or you decide on your own, retiring before you are ready can cause plenty of regret. In fact, 30% of retirees admitted they would gladly re-enter the workforce if a job became available. (1)

If you decided to retire before turning 65, you probably had to find pre-Medicare coverage, which is often quite a bit more expensive than an employer-sponsored plan. By waiting until you turn 65, you will qualify for Medicare and not be forced to obtain other health insurance to cover you during the transition.

Financially, the earlier you retire, the fewer years you have to save and the longer you will have to live off of your money. If your finances are keeping you up at night or you are living at a lower quality of life than you are used to, you may regret retiring when you did.

Working even a few years longer can provide these valuable benefits: 

  • More time to accumulate savings
  • More years to apply toward Social Security, which could result in a larger benefit amount
  • Health insurance coverage through your employer
  • Purpose and identity
  • Stronger mental and physical health (2)

On the other hand, another common regret is waiting too long. If you have enough money saved and you and your financial advisor have planned for every aspect of your golden years, you should consider retiring as soon as possible. The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it. The point is this: your situation is unique. Be sure to take a good hard look at your financial situation to ensure your money will last, and don’t let your retirement fears hold you back.  

2. Not Creating A Personalized Social Security Claiming Strategy

Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you choose to collect these benefits will impact the amount of benefit you receive. 

Full retirement age (FRA) changes based on the year you were born. For those born in 1937 and earlier, FRA is 65. After 1937, two months are added each year until FRA becomes 66 for those born between 1943 and 1954. Starting in 1955, two months a year are added again until the FRA becomes 67 for those born in 1960 or later. 

If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive your full Primary Insurance Amount, which is the full benefit that you have earned, but if you choose or are forced into early retirement, you will receive a reduced benefit. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits before full retirement age, up to 30%.

3. Overspending In The First Years Of Retirement

Even if you have a solid nest egg saved to carry you through retirement, you still need to exercise financial discipline to ensure your money lasts. Dipping too deep into your savings as soon as you retire could make or break your retirement dreams. Practicing self-control to resist impulse buying and unnecessary spending is very important if you want to see your savings pan out as planned.

However, these frivolous behaviors are not always to blame. It could be that you set a plan that sounded good on paper but just wasn’t flexible enough to allow for some stress-free personal spending. So, when developing your retirement plan, create a realistic retirement budget, factoring in travel or hobbies, then work with your advisor to find a withdrawal rate that will stretch your money for as long as possible.

4. Not Having A Retirement Bucket List

Free time is a major perk of retirement, but when you go from working full-time to not working at all, it can be a shock to your system. Saying goodbye to your career, your colleagues, and your routines can cause anxiety and depression. But if you make a plan for how you will fill your time with activities that fulfill you, you can avoid the negative emotions that can come with this life transition. 

Do you want to know what activities result in a fulfilling retirement? A BMO study on retirement planning reveals that retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life.(3) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure.(4) The takeaway here is to be intentional about your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality. It’s easy to lose your identity when you say goodbye to your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.

Do You Want A Regret-Free Retirement?

You probably don’t want to celebrate the incredible milestone of retirement and then wake up the next day wondering if you made the right decision. Deciding when and how to retire is one of the most difficult decisions you will make in life, but you don’t have to make the hard choices alone. If you would like to avoid facing these common regrets when you retire, reach out to me at (949) 221-8105 x 2128 or email me at michael.loo@lpl.com

About Mike Loo

Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to make a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@lpl.com.

Mike Loo is a registered representative for LPL Financial (LPL) and an Investment Advisor Representative (IAR) for Trilogy Capital (TC). Securities offered through LPL, Member FINRA/SIPC. Investment advisory services offered through TC, a Registered Investment Advisor. TC markets advisory services under the name of Trilogy Financial (TF), an affiliated but separate legal entity. TC and TF are separate entities from LPL.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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(1) https://www.cnbc.com/2014/08/21/retirees-go-back-to-work.html

(2) http://www.medicaldaily.com/planning-retiring-early-consider-these-5-health-risks-first-247669

(3) https://commercial.bmoharris.com/resource/wealth-management/whats-your-retirement-game-plan/

(4) http://psycnet.apa.org/journals/pag/28/2/578/?_ga=1.177767717.1281536077.1488342343