If you are planning to retire anytime soon, it would serve you well to know what the common retirement problems are for most people. This will help you gauge your own preparations and more importantly, give you a heads-up on potential issues you might face. Once you understand these threats better, you can make better retirement preparations.
According to a Gallup survey, most Americans believe retirement comes at around 66 years old. This is the time when a lot of consumers hang up their work clothes and trade them for shorts and shirts. Meetings and reports are replaced by long hours at home cleaning, cooking, or binge-watching their favorite shows.
Retirement also means having more time doing the things you love to do. You can devote more hours to your hobby whether it is carpentry, baking, photography, or even social service work. You can volunteer more at the center or even put up your own foundation. The point is you now have more time to do the things you want to do. That being said, where do common retirement problems come from?
Retirement should be one of the most exciting stages of your life. You are done with most of your financial obligations such as paying for your own college debt, your home, and even your car. You could have also put your kids through school and paid for their cost of attendance in college. Now that you are retired, you only have to think about yourself. So where to problems start?
Not enough money
This is one of the most common retirement problems people face when they reach their golden years. Planning for retirement takes decades to pull through and you need a combination of different things. Planning entails identifying the amount you need to retire on. For you to pin this number down, you need to have an idea what you want to do in retirement. This is important especially as NBC News shares that more retired people are afraid of losing money in retirement far more than death itself.
If you plan to travel a lot in retirement, you need to factor in that activity. Flying in and out can take a big chunk off of your retirement money. Not to mention the expenses for whatever activities you might want to do during your vacation. You need to plan and save up for this activity so you can include it in your retirement plans.
Retirement planning is crucial to help you avoid losing money in retirement. It is a challenging situation to be in because, at this point, you might no longer have a stable source of monthly income. Your funds are all being spent at this point. If you run out of money, you might be forced to come out of retirement and go back to work.
Medical expenses will take its toll
Common retirement problems also have a lot to do with medical expenses. Again, it revolves around money but there is something you can do to make it better. For one, you could have heard how prevention is always better than the cure. Much like how you should drive carefully to keep your car running for a longer time, the same can be said about your body.
You need to take good care of your body leading to retirement and while you are in retirement. Develop a habit of having a daily exercise routine to help strengthen your body. The sooner you get used to it, the better chances you will carry it over to retirement. This will help you take care of your body better as you get older. This will give you the chance not only to enjoy your retirement better but lessen your need for over the counter medicine saving you money along the way.
When you look into Medicare, be smart with what you need as the original one usually does not offer coverage for some common expenses like vision care and even dental plans. However, taking a Medicare Advantage plan can help you with some common expenses in old age. This can also serve as your drug plan so evaluate your prescription drugs carefully before signing.
You get bored real quick
One of the most common retirement problems you might encounter is getting bored quickly. You had this grand idea of how you wanted your retirement to be. It could have been filled with days at the beach or at some other tropical locations. Retirement could also be about days at the golf course playing your day away.
However, there could be limitations to these plans. Unless you relocate to the beach or get a place near the golf course, chances are you have to limit these activities. You cannot spend every day to go to the beach or play golf especially if they are far from you. If you only plan your retirement around these activities and you do not get to do them as often, you might get bored quickly.
The way to address this problem is very simple – you simply need to have a backup plan. Having a plan B, C, or even D will give you plenty of options if your first one is not doable. Look for hobbies you can do or even income sources you can explore on the side. Remember that even a regular small amount that comes in can be a big help to your budget.
No spending plan
Much like how you manage your budget when you were still working, you need to apply the same amount of dedication, if not more to your spending plan in retirement. This is because money coming in is not the same as before. You need to make sure that you manage what you have very efficiently. This is one of the most common retirement problems people have.
A lot of people point out that you need at least 80% of your pre-retirement income to live comfortably in your golden years. If you are willing to downsize your house or live in a less expensive area, you might get away with a lower percentage, However. The general rule of thumb is to save up enough money so you get 80% of your income before you retired.
You might think that your Social Security will take care of every single expense you have but it will only cover part of it. It is still up to you to come up with the rest. Remember also that you can withdraw up to 4% of your nest egg each year. This will leave you enough so you do not run out of money in your retirement years. Plan your spending carefully so you can enjoy your money in retirement.
There are a lot of senior people who should know what these common retirement problems are so they can prepare accordingly. Understanding these pitfalls early on gives people the chance to improve their retirement planning to overcome such hurdles. They would have more time to start taking care of their body. They can even ramp up their retirement savings to give them the ability to take ou 4% every year. It is also possible to start looking for a smaller house to live in retirement. The possibilities are endless as long as you start early with your plans.