When you’re retired one of the biggest concerns is if your savings will last through your retirement and today people are living longer than ever before. So to help your dollars last longer we’d like to share with you three big money mistakes to avoid in retirement as reported by Money magazine.
1) Claiming Social Security Too Early. Money reports a third of people who began receiving Social Security in 2016 started at age 62, which is the earliest age at which you can claim retirement benefits. Experts say that’s too early, because if you wait, your inflation-protected annuity will grow bigger, which means more money in your pocket in the end. Keep in mind though, you might not want to delay taking Social Security if you need the money right away or are in some other type of situation in which claiming right away would make sense, for example if you are in poor health and don’t expect to live long.
2) Discounting Inflation. While we may have low inflation rates right now, remember that likely won’t last forever. Money says people who discount inflation may be too conservative in their asset allocation and most investors, outside of the very wealthy, need a healthy allocation of stocks to help their portfolio grow. According to an old rule of thumb, to get that percentage, subtract your age from 100 as long as the number is considered to be the floor. So if you 70, a minimum of 30% of your portfolio should be in stocks.
3) Failing to Plan for Medical and Long-Term Care Costs. As we reported in a previous story, Fidelity found a 65-year-old couple retiring in 2017 will need an average of $275,000 to cover their retirement medical expenses. Experts say you may want to consider a hybrid long-term care and life insurance policy.
We hope these tips aid you in your retirement plans, but as always, if you need further assistance consider enlisting the help of a financial adviser, or other professional, who can guide you to a secure retirement.