Retirement regrets happen because of two things: ignorance and lack of preparation. It can definitely be avoided if you only deal with these two. While nothing about our future is certain, there are steps that we can take to make sure that our retirement will be lived under the best conditions. You deserve nothing less and working on it as soon as possible will help make your future more secure.
Planning for the future involves more than just determining how much you will need to retire. It also involves a strategic plan that will make sure you will not experience any of the common regrets that retirees usually have once they reach the right age.
How is the current retirement confidence in the country
The Employee Benefit Research Institute conducted a survey the revealed the retirement confidence this 2014. The data published on EBRI.org revealed the following:
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24% of consumers are not very confident about their retirement – but the overall confidence level increased in 2014 compared to 2013.
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The retirement confidence is influenced by the household income and the involvement of households in a specific retirement plan.
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Almost half of workers without a retirement plan, regardless of the household income, are not confident. For those who have a plan, only 10% were not confident about their future.
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58% of employees and 44% of retired individuals have problems with debt. 24% and 17% of employees and retirees, respectively, said that their debts were higher compared to 5 years ago.
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36% of employees have less than $1,000 in their savings account. Included in this statistic is 68% of households that earn less than $35,000 annually.
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38% of employees with retirement plans have less than $25,000.
Statistics show that although retirement confidence is up, we have a long way to go in terms of our savings. If we do not prepare for our future well, we could be facing a lot of retirement regrets when the time comes for us to quit our work.
9 regrets of retired individuals that you want to avoid
In another statistic from an infographic published on ZeroHedge.com, it is revealed that 40% of Baby Boomers plan to work until they drop. The main reason for this is either too much debt or not having enough money to retire. Despite the later retirement age of 67 years (up from 63 years 10 years back), consumers still fall short when it comes to preparing for retirement.
Most of the time, the people who are forced to work longer or give up retiring altogether end up having a couple of regrets. Here are 9 of the retirement regrets that you may want to ensure that you will avoid in the future.
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Spending more than they should have. This is very common. When we were young, we thought we were invincible and that gave rise to irresponsible spending habits. We did not hesitate to spend on the present because we always believed that we deserved to be happy now. Instead of saving, we spent it on unnecessary things which ended up as junk when we got older.
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Saving too late. Another one of the retirement regrets of consumers is starting too late when it comes to saving for retirement. When we were young and single, our expenses were not as much as it was. We could have maximized our retirement savings by then. But seeing that retirement was so far off, we always opted to postpone it. What we failed to realize is that starting early on our retirement savings meant that we can put in less every month. If we start late, we have to put in more contributions and by that time, our expenses would have grown too (e.g. when you marry and have kids).
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Having too much debt. As bad as overspending is and failing to save, using too much credit will make things worse. We are all guilty of using our credit cards every now and then but there are a lot of people who jeopardized their retirement because of debt. Instead of saving their money, they were forced to put the amount into their debts.
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Retiring too early. We all want to retire early but you need to know if it is the perfect time or not. Some actually have retirement regrets about retiring early can cost you a lot in the long run. It will cut short your time to save and also increase the chance of you outliving your funds.
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Borrowing from the retirement fund. Some people use their retirement fund to buy something, make investments or to pay off debts. While it is technically your money, you have to make this as one of your last options. Unless you have a plan to pay back the money without falling back on your retirement plan, then do not take money from this fund. It is like robbing from your future self.
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Assuming that Social Security will suffice. According to the statistic provided by Zero Hedge, in 1950, one retiree’s Social Security benefit is provided by 16 workers. In 2010, the ratio is down by 3.3 workers. This decline should make you hesitate about the reliability of this system. Do not rely on this alone for your retirement. If this ends up failing by the time you retire, that could be the biggest of the retirement regrets that you will have.
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Abusing my health. It is also important for you to take care of your health because this is one of the biggest expense that you could face when you retire. According to the survey done by EBRI, 24% of workers fear that they could not finance their future medical expenses. The best cure for this problem is prevention. Just live a healthier lifestyle to minimize the pain and weakness that comes with old age.
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Failing to consider a tax-forward plan. Retirement regrets also include the failure to minimize the taxes that could have increased their yearly payouts. You may want to research about this to understand how you can stretch your money to outlast you.
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Living retirement in the wrong place. Running along the same line as taxes, you should consider where you will live so you do not have to pay a lot of taxes. There are retirement friendly places in the country and you should choose to live in one of them.
Now that you know the retirement regrets, you should be able to identify the issues to resolve during retirement planning.
How to build a regret-free retirement for yourself
Regardless of your age, the important thing about preparing for retirement is to act now. There are many rules that can help with retirement planning and here are a couple of tips to get you started.
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Start by mapping out a retirement guide. Obviously, you need to start by mapping out what you want to happen in your retirement. Determine how much you will need, what type of lifestyle you want to lead and so on and so forth. What you are doing is creating a plan that will dictate how much you need to put aside every month to reach your retirement target.
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Automate your retirement savings. This will help ensure that you will not put it elsewhere. Whatever you decide to put into your savings should only be allotted there. Do not take it unless it is a matter of life and death.
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Learn about the available retirement plans. There are many retirement plan options that you can tap into. There is the 401(k), the Roth IRA, the IRA, etc. You want to make sure that the plan that you have chosen will help you reach your retirement goals best.
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Explore investment opportunities and diversify. Among our options include stocks, bonds, mutual funds and ETFs. Save up enough capital for your investment portfolio and divide it accordingly. Having more than one investment can secure your finances.
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Work on your debts. There is no room for debt in any retirement so try to pay this off before you do. Otherwise, the payments will just eat up what limited resources you have.
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Consider a no-stress retirement work. Working part-time or using a hobby to earn from is a great way to keep your mind and body active while earning on the side. It can help sustain your retirement fund.
- Take care of your health. Lastly, you want to make sure that you are in top shape. Live a healthy lifestyle to keep sickness away. Based on the data provided by Fidelity.com revealed that a 65-year-old couple will need an average of $220,000 to pay for medical expenses throughout their retirement life. This will be bigger if you abuse your body in your youth.