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How to avoid the 4 most painful retirement mistakes

Planning diligently will help you ensure you have a secured retirement.



The rules and expectations of your retirement have changed. You are now contending with increased living costs, living a longer life, and likely relying on your own savings and assets to cover your bottom line. There are fewer “safety nets” for you as a retiree as there were a generation ago, and you need a longer financial runway to protect yourself should you make it to the big 100.

So what does this really mean for you and what can you do about it?

It means your margin of error for planning your retirement is very slim. Miscalculating your retirement planning can and will be costly. Nobody can finance their retirement. There are no loans to cover your retirement costs.

So it’s up to you to ensure you plan diligently and accurately. Let’s talk about the four most painful retirement mistakes you can avoid by planning diligently.

Mistake #1: Not having a clear vision of retirement

Think you can just wing it in retirement? Think again. You need a clear sense of what you expect and want your lifestyle to be like. Don’t just assume you can afford to buy that ocean front condo or travel the world for six months.

You’ll need to know exactly how much you can afford to spend or buy each year in your retirement to prevent the risk of running out of money too early.

Fee-only financial planners are experts at forecasting how long your money will last and running risk analysis to see how high or low your risk of running out of retirement is based on unforeseen circumstances.

Mistake #2: Underestimating retirement costs

Snickers don’t cost a nickel anymore. Likewise, retirement isn’t exactly a cheap vacation anymore. You have exponentially increasing healthcare costs. And while you may be healthy now, trust us, your visits to physicians and hospitals will increase in retirement.

The average cost of healthcare alone for a retired couple is $400,000. And that’s just the average.

Retirees. One common mistake among retirees is that they tend to forget to save for healthcare costs. (Source)

The other costs you’ll be contending with in retirement may even include eldercare for your living parents.

The biggest expenses in retirement are often the unexpected ones. You can’t plan for everything, but you can be prepared for everything. That’s the key to a financially healthy and robust retirement. Learn how to be prepared for the known and the unknown.

Mistake #3: Managing investment performance rather than risk

If you’re a do-it-yourself investor, you are biased to want to see big percentage gains in your portfolio. It’s just how we’re wired. If the market is up 10 percent, we want our portfolios to be up 15 percent. Not only does it mean more money for you, but the bragging rights about “beating the market” can be pretty great too.

Plus, with all the extra time you’ll have in retirement, you may be inclined to “picking stocks,” thinking you can continue to build your portfolio with stronger gains than what investing in an index fund can offer.

But hold on there, Charlie. That could be a huge recipe for disaster.

Retirement isn’t about wealth accumulation like it was when you were saving for your retirement. Retirement is about preserving the wealth you have and ensuring a stable and predictable income that will last your entire retirement.

Managing investment risk is about eliminating potentially retirement killing downturns in your portfolio. And yes, it often means you won’t see market-beating gains in your portfolio, but remember, that isn’t the goal.

Your goal is to make sure your money outlives you. The best way to do that is to build a stable and predictable investment portfolio that protects you from large downturns in the markets while generating modest gains to keep your portfolio ahead of rising costs of inflation.

There are no guarantees, but trying to beat the markets and pump up your investment returns in retirement is about as close to a guarantee that you’ll risk losing more money than you can afford.

Mistake #4: Not knowing where you are or should be right now

Do you know if you’re on-track to have enough money to cover the lifestyle you expect to have in retirement? Most people don’t. They tend to make inaccurate and falsely optimistic “assumptions” that they have enough now and will be fine in retirement.

The absolute best thing you can do before you retire is to get a “retirement ready” check done. A professional financial planner will tell you if you’re on-track or off-track to being retirement ready.

(Featured image by 张 学欢 via Unsplash.)

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Esteemed personal finance pro Ray LeVitre, CFP, author of “20 Retirement Decisions You Need to Make Right Now” and Founder/Managing Partner at Net Worth Advisory Group. This 19+ year industry veteran helps individuals make key financial decisions during that critical yet oft underestimated period transitioning from the workforce into retirement—many of which are irrevocable and profoundly affect one’s financial security and lifestyle for decades beyond. He may be reached online at