When you retire what do you want your lifestyle to look like do you want to
dine uh fancy restaurants and travel the world or live off a tight budget and
constantly stress about the size of your retirement fund
you see building for a retirement is a low life long journey and you could put
your golden years in jeopardy if you make the wrong financial decisions
luckily boss I want you to avoid that future headache by sharing with you five
mistakes you must avoid one retiring and if you're new to the channel then hit
the subscribe button below for more life-changing content let's face it we
all want an enjoyable retirement no matter how much you love your job having
the ability to enjoy the fruits of your labor that you've worked for decades to
build is something to cherish and the good news is that anyone can set
themselves up for an amazing retirement however it does take careful planning
that must commence when you are young not only does this expand the time
horizon you have to invest for your later years but it also allows you to
better weather financial uncertainties that come with economic downturns many
in which we have experienced in the recent past
not to mention starting to save at an earlier age allows you to better address
doctors such as inflation and healthcare unfortunately even with these factors
consider there are mistakes at early retirees or any retiree for that matter
can make that will dramatically impact the quality of their post career life
this is why it pays to be informed not only when you start retirement but also
during the years leading up to it an early retiree has to be thinking ahead
and have realistic plans about the future but it's all too common that the
wrong financial moves end up being made the Federal Reserve places 36% of adults
who haven't retired as believing their finances are on track for retirement
another 44 percent are sure they're on track and the remaining or not this
leads a lot of people with questionable futures to have to deal with and these
issues will only be compounded when making these five mistakes once a
retirement finally comes mistake number one not phasing into retirement don't
make the mistake that many early retirees make by picking a random age
and then working to save the amount needed to reach their goal since a black
and white number approach never reflects reality your early retirement goals can
become unattainable unless you gradually phase out the
process by making the end of your career come in phases you can gradually
downshift early retirement and still work from home work part-time or switch
to a less demanding job a slow transition into earlier retirement will
make it easy to bridge potential psychological and financial gaps that
may appear between your career and full-time retirement starting early
retirement by working less will move your focus from the cessation of your
working life allowing you to envision your total retirement earlier an
excellent example of a phased out retirement will be a 45 year old
employee that's looking to retire a 55 and makes an annual salary of $100,000
so that the monthly benefits for this individual are more substantial they
planned away five years after becoming eligible before drawing Social Security
using the strategy the early retiree with an above average salary history
will be collecting nearly 31 thousand dollars per year in retirement benefits
if the early retiree had quit their job entirely at age 55 all expenses would
have been covered solely by the retirement savings until they became
eligible for Social Security the best course of action will be to reduce the
workload gradually making at least $50,000 in wages from age 55 up to 59
such a phased out early retirement would see the retiree collecting $30,000 from
the age of 60 until 63 ultimately cutting back on the amount of
withdrawals from their personal retirement account mistake number two
not setting up multiple streams of income
early retirement will involve more than building your nest egg until it's ready
to hatch and then cracking it to pay for your after work years maintaining a
proper lifestyle during retirement will require that you have multiple income
sources and now rely only on your investment options or retiree savings
there are also psychological benefits or relying on more than one source of
income during multiple resource planning however it's essential to account for
inflation which is not adjusted for your pension your Social Security benefits
which you can also claim early on are annually adjusted to cover your Medicare
costs from inflation by investing in assets like real estate and certain
recession-proof stocks you ensure that the value of your money continues to
grow despite inflation there's a higher payout of around 8% for every year been
Fitz are not claimed after aged 62 and you also can't withdraw from your 401k
or IRA investments until your age 59 and a half years old otherwise your drawers
will attract a surcharge penalty of 10% which reduces your income further and
places you in risk of depleting your retirement savings your perfect early
retirement plan should include additional income sources from which you
can depend on before you reach 59 and a half years old these backup resources
could consist of part-time work stocks bonds taxable brokerage accounts are
assets like real estate rentals in addition to your retirement nest egg a
large portion of your retirement investment may be in stocks or growth
options that help your savings lost long after you retire this approach is
advisable only if the stocks have a history of stable performance as facing
a recession or market downturn may affect your long term assets
disproportionately due to the sequence of returns risk while most workers will
automate their investment of 401k savings it's vital for early retirees to
consider taking an interest in these and other investments such as low-cost
mutual funds or ETFs any money that you invest in the stock market should be
that which you can afford to lose should the stocks fall and not funds from your
retirement savings or investments to maintain your desired level of income
during turbulent market downturns will require withdrawing from decline value
accounts necessitating that you liquidate more assets
plan your multiple streams of income based on the conditions of the market
and be flexible with your annual withdrawal amount from an investment
account don't be tempted to dip into your retirement fund balance for an
extravagant purchase as you may not be able to replace it as an early retiree
always keep in mind that you withdraw from investments such as an IRA will
attract income tax and penalties accompanying distributions taken before
you are fifty nine and a half years old mistake number three mismanaging Social
Security benefits though it makes solid financial sense to wait as long as
possible before collecting Social Security for your retirement benefits
you risk compromising your reliance on your financial assets sure you may
receive more monthly benefits if you defer these collections until you're
older however this is not always the most advised
we'll move a good reason to start collecting your Social Security benefits
early is if you're in a job that's not good for your health where you'll only
be earning what you've worked for all these years by starting early after
retirement to collect benefits you'll be getting paid more money through the last
decades of your life when you need it most
waiting too long to sign up for social benefits also means that if you don't
live past your 80s you're leaving money on the government's table and these are
funds which are not transferable a reduced monthly payout is better than no
benefit at all to sum up this point here are three situations where it might make
sense to collect your Social Security benefits sooner rather than later first
you've reached the eligibility age of 62 and want to use the money in the earlier
days of your retirement second your total income requirements will require
that you would draw from your retirement account for more than five percent of
your nest day's total which increases the risk of premature draining of your
account lastly you need additional income from Social Security despite the
monthly payments being less before attaining the age of 70 reducing the
risk of over-dependence or depletion of savings mistake number four overlooking
health costs your health insurance while you are working is probably provided by
your employer and when you're fully retired at 65 or older you'll be
primarily covered by Medicare when you retire early there can arise
bewilderment regarding your health insurance options as you fall between
the employed and a fully retired unfortunately things are not made easy
by the current health insurance climate of uncertainty a financial adviser or
health insurance specialist will recommend the best options and the most
comfortable rates for your early retirement if you have a spouse at this
juncture who is continuing to work after you've retired it makes sense to join
their health insurance plans the Affordable Care Act provides each
state's health care exchange as an affordable insurance option for the time
being and tax credits for your lowered retirement income may include assets to
offset premiums there is also direct primary care to consider an alternative
health insurance model that will charge you a flat monthly rate for any routine
primary medical care services I recommend that you buy long-term health
insurance before taking early retirement since premiums will
crease as you age also don't spend too much on your health premiums when you
are in the earlier stages of your retirement and are still healthy and
active it's when you get older that the effects of aging will require that your
health insurance arrangements pay off since you will require care and you
can't rely on government policy Medicare remember that even with supplemental
cover and Medicare you still need to pay for insurance deductibles and there are
medical procedures that may not be part of your coverage alongside insurance
co-pays that can accrue over time Medicare doesn't cover optician services
dental care or hearing aids fidelity published at the average American
couples retirement health care will cost them over two hundred and eighty five
thousand dollars without including long-term care services with Medicare
covering only 80 percent of your healthcare cost during retirement you
can purchase supplemental coverage dish out-of-pocket or keep very healthy
earmarking some extra funds for such old-age health expenses will see you
live out the rest of your retirement in comfort mistake number five not
considering your legacy over 40% of elderly parents provide their adult
children with financial support in one way or another the children of early
retirees tend to be younger and more dependent than usual making the
financial burden unbearable for son if you have more than one child to support
after early retirement you might find yourself spending more than a thousand
dollars monthly which is not uncommon factoring your financially dependent
children your early retirement plans will mitigate unexpected expenses and
the relationship strains that accompany them instead of cutting off your grown
children talking to them before retirement will establish the financial
support they should reasonably expect from you to prevent your financial plans
from being threatened by additional money requests set the ground rules with
your children on how much and how long you will give them support ultimately
when you retire you want assurance that your financial future is stable your
sacrifices to put away retirement funds your investments and the Social Security
retiree benefits play vital roles when it comes to planning for early
retirement don't compromise your financial capabilities during your
golden years by overlooking these retirement mistakes thanks for watching
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