It’s no surprise that most baby boomers are facing gloom in their retirement. With the way the economy is going and the slashes in healthcare benefits, there isn’t much to look forward to when it comes to retirement. Aside from the economic factors that just can’t be controlled, there are even three deadly mistakes that roughly half of American retirees are making. Find out what they are, and find out how you can avoid them:
1. Using Social Security Benefits Too Early
The longer you keep yourself from using your Social Security benefits, the higher the amount you can get. Unfortunately, according to Social Security’s Annual 2010 Statistical Supplement, 47 percent of Americans who retired in 2009 started using their Social Security benefits at the young age of 62. This is the youngest possible age for benefits to start, but it also gives the lowest possible benefit.
Having a Social Security income can matter a great deal. After all, you’re being paid a monthly benefit for the rest of your life, no matter how old you get or how bad the economy becomes. But the longer you wait to use the benefits, the higher the payments you can get. Just don’t delay using them after the age of 70 though, because the payouts plateau at this age. Again, delaying claiming the benefits can result to bigger payouts. If this can be done, then it’s better to actually discipline yourself.
2. Using Up Retirement Savings Too Quickly
The moment Americans retire, they start spending their retirement savings as if they’ve won the lottery. They tend to underestimate for how long the savings are supposed to last to meet their current and future needs. 36 percent of retirees have no set plan of how much to withdraw and when to withdraw the savings, leaving a much to fear when they have medical emergencies or if they live too long.
The best thing to do is plan just how much you’ll be needing, planning for at least 20 years or more. It can be scary to think about the consequences of outliving your retirement savings.
3. Not Having Enough
And finally, even before Americans retire, most of them don’t really know just how much they will need once they retire. According to the 2011 Retirement Confidence Survey made by the Employee Benefit Research Institute (EBRI) only 42 percent of Americans have calculated just how much they will need upon retirement. This could mean under saving for retirement, leading to a low retirement savings just when they need it most.
The best thing to do is calculate ahead how much you will need in the future, and don’t forget to include inflation.
Not caring about retirement can lead to some shocking consequences that can be difficult to remedy because of the lack of opportunities that are presented to one once he gets older. To offset the possible risks, the best thing to do is plan early, save early, and spend less.