6 Common Retirement Planning Mistakes People Make

(don’t forget to checkout the video of this blog too)

For many people, retirement planning seems like a daunting and intimidating process.

But in reality, it’s like anything else in life.

If you put a plan together and execute on that plan consistently, you will be wildly successful.

Part of the plan includes not making some of the common mistakes that most people make on the journey to retirement.

Here are 6 common mistakes people make in planning for retirement:

✅ Mistake #1: Waiting too long to save

People simply way too long to start saving money which means they miss out on years (sometimes decade of compound interest).

Starting just 8 years earlier can literally double the amount of retirement assets you have 😎

Build the habit of saving at least 20% of your gross income every year as early as you can (ideally 30%) and you will never have to worry about money in retirement (you’ll just have to worry about not paying a ridiculous amount in taxes… which is a good problem to have).

✅ Mistake #2: Failure to take advantage of company matches

Many people have company-sponsored retirement plans that they fail to capitalize on.

When your company offers you free money, you have to take it.

It makes no sense to turn down a 50–100% instant return on your money.

✅ Mistake #3: Not having enough money in a tax-free bucket

Most people have the bulk of their retirement savings in a taxable environment, which is not only susceptible to sequence-of-return risk at retirement, but it’s very at-risk to rising tax rates.

When most of your money is taxable you don’t know exactly how much retirement income you have, because you don’t know how much you will actually take home.

This is why Roth IRAs and life insurance vehicles can be the holy grail for a tax-free retirement

✅ Mistake #4: Not taking inflation into account (even in retirement) 😅

The only way to combat inflation is by having your money in some type of a growth environment, whether it’s market-based or not.

People often forget how much of an impact inflation will have on their money once they’re in retirement.

In fact, you need almost twice the amount of income at the end of retirement as you do in the beginning just to live the SAME lifestyle‼️

This is why your money stills need to be leveraged to grow in some way, and often times, social security it a great way to hedge against this, as I talk about in my next point.

✅ Mistake #5: Claiming Social Security too early

I know it’s tempting to take social security as soon as you’re eligible, but you would be really smart to reconsider.

Not maximizing your social security benefit can create a whole host of problems for you in the later years of retirement.

For one, you lock in a lower benefit that typically loses value to inflation every year (even though social security is “inflation-protected” it doesn’t usually keep up with real inflation).

This lower benefit reduces the spousal benefit, which is 50% of the primary benefit, AND the survivor benefit, which is what the surviving spouse will be forced to live on when one spouses passes away.

By not maximizing your social security benefit, you can leave yourself short of the income you need in the later years of retirement, especially if inflation continues to rise and/or you have a long-term care event. 😞

✅ Mistake #6: Not protecting yourself from a possible long-term care event

long-term care can easily cost $100,000 per year and 70% of retirees will experience some need for extended care.

This is a huge risk that must be addressed to ensure that you don’t run out of money in your later years of retirement.

In fact, even very wealthy families can see their entire retirement portfolio wiped out with a single long-term care event.

The good news is that there are some creative solutions for taking this risk off of the table that are not nearly as costly as they once were.

So, there you have it.

The 6 most common mistakes retirement planning mistakes that people make.

While these mistakes are common, most of them are fairly easy to address with just a few small changes and a little bit of foresight.

Let’s chat 💬😎