Americans often make unforced errors that can wreck their retirement. Here are four common mistakes to avoid. Maintaining a risky asset allocation is one error.
Close to half of Vanguard investors aged 55 and up had more than 70% of their portfolios in stocks. Having too much in the market is risky, especially if you need cash during a downturn and are forced to sell at a loss. Forgetting about emergency savings is another mistake.
Many assume they no longer need to save extensively once retired. But 13% of households 55 and up couldn’t cover a $400 unexpected expense. Maintain an emergency fund with a few months of expenses in a high-yield savings account.
Claiming Social Security at the wrong time is also costly.
Avoiding costly retirement pitfalls
Research found households lost an average of $111,000 in potential income by claiming too early.
Benefits are reduced by up to 30% if claimed at 62 instead of waiting until full retirement age. Not planning for health-care costs can have dire consequences. A 65-year-old retiring in 2024 will spend an average of $165,000 on medical expenses.
Plan with dedicated savings and comprehensive insurance plans. “I’ve watched countless people in their 20s and 30s push off retirement planning, thinking they’ve got all the time in the world. Trust me, they don’t,” said Andrew Lokenauth, a financial expert.
Chris Heerlein, a CEO, noted another key mistake is focusing on hitting a savings number rather than creating a reliable income strategy. “That’s where confidence comes from, not a single number but a system that supports your lifestyle no matter what the markets are doing,” he said. By avoiding these mistakes, you can help ensure your golden years are financially secure and fulfilling.
Start saving early, even small amounts, and treat retirement like a paycheck replacement plan.
