Mistake #1: Underestimating future healthcare costs:
Medicare covers medical expenses starting at age 65. But it only covers certain ones and only after you have paid deductibles, coinsurance and certain copays! Many medical expenses are not covered by Medicare and instead are picked up by a Medicare Supplement policy that costs you premium. Or the costs will be paid out of your pocket.
Fidelity’s 2015 Retiree Health Care Cost Estimate shows that even those who retire at age 65 and are immediately covered by Medicare can still expect to incur $245,000 in medical costs during their retirement not including the costs of long-term care. Medicare does not cover the costs of long-term care. Medicaid does. But in order to qualify for Medicaid, you have to spend down your assets almost to zero before you can qualify.
Related Article: What Would You Need to Retire with Peace-of-Mind
Mistake #2: Listening to and trusting the wrong people for financial advice:
It never ceases to amaze me how many intelligent people take advice about their retirement from people who are completely unqualified to give them this critical advice.
For example; everyone seems to have a friend or family member who is a self-proclaimed financial genius Your friend may have done a great job with his or her own retirement, but that doesn’t mean he or she knows the correct answers to your retirement problems and questions. Another bad decision is to rely on the talking heads from Wall Street who fill the airwaves of TV and on the internet.
Related Article: Three Mistakes People Make In or Near Retirement
That’s why I highly recommend that you turn instead to a qualified Financial Professional. You don’t need to be wealthy to sit down with a financial planner or retirement specialist. And, you can’t put a value on a qualified professional who can smartly integrate all of your assets, income and expenses into a cohesive retirement plan.
But what if you think you already have a financial professional as your trusted advisor? Well, then I would ask: Are you sure that person is qualified to address all the critical issues of Retirement? Obviously selecting the wrong advisor (or having no advisor at all) can mean the difference between financial security and financial ruin.
Mistake #3: Starting Social Security too early:
Many people want to begin collecting their social security benefits when they first become eligible at age 62. What many people don’t realize is that the amount of benefits you receive scales with the age that you begin receiving benefits. The longer you wait to start collecting, the greater your initial annual income. The payments received if you begin collecting at age 70 are nearly double those you would receive if you begin at age 62.
Social Security benefits offer many advantages over other retirement options. So great care should be taken to maximize the return. Social Security income adjusts with inflation, is unaffected by the stock market and can be passed to your spouse upon death. Through careful planning you can delay the onset of social security benefits and still reap the rewards of a lifetime payment.
Written by: Steve Geist
Steve Geist, The Retirement Guy
Financial Strategist – Retirement Plan Specialist