Some 10,000 Americans will retire each day, some more successfully than others. Here are three mistakes you should avoid to ensure you’re one of the successes:
Mismanaging Social Security benefits
Many retirees collect Social Security benefits as soon as they are eligible at age 62, but doing so comes at a cost: You’ll collect less each month than you would have if you had waited until age 65. Many believe that if you live a long time, it evens out, but you may not want to bet on that, especially if you don’t need the benefits to cover living expenses. Delaying benefits until age 70 can boost your payout by as much as 70 percent. So think twice before you take benefits at age 62.
Failing to create a budget
Some new retirees feel flush with cash…and spend. Remodeling projects are common splurges, as are one-time big-ticket purchases, such as boats and cars. These large purchases, however wonderful, can make a big dent in the money you’re going to need to live on.
Even daily expenses can add up without a budget. Research indicates that when people suddenly have free time, they tend to increase spending. These problems can be avoided by creating and maintaining a budget that’s realistic for today’s market environment and your lifestyle.
Not having a life plan
If you’re a typical new retiree, you’ve probably spent a lot of time thinking about the financial side of retirement, but there’s more to your golden years than living within your means. What are you going to do with all your free time?
Not knowing that can lead to a whole range of emotional difficulties. Smart retirees “test drive” their new lifestyle by taking more leisure time as retirement approaches. They realize they’ll need to develop new routines, hobbies and networks. Test driving helps them envision a successful future.