Common retirement blunders devastate the financial security of many Americans. Many people claim their benefits at 62, which results in reduced monthly payments for the rest of their lives. Your retirement consultant in Fresno CA will explore how nearly 70% of people will need some form of long-term care, yet most fail to plan for these expenses. The average woman turning 67 may spend about 20 years in retirement, and this makes planning significant.
Early Planning Mistakes That Set You Up for Failure
One of the most damaging retirement mistakes you can make is to postpone your contributions. Start saving at 25 and contribute $3,000 each year for just ten years, then stop. Your $30,000 grows to about $315,500 by age 65 (assuming 7% growth each year). But delay until 35 and save that same amount for 30 years. You’ll contribute an additional $60,000 and only reach about $306,000. Time matters more than the total amount you deposit.
Most workers save nowhere near what they should. Financial experts suggest saving 15% of your pre-tax income to accumulate 10 times your salary by age 67. Yet only 43% of American workers participate in a retirement savings plan. This gap creates a crisis you can predict.
Investment and Money Management Blunders
You tap retirement accounts before age 59½ and you make one of the priciest retirement blunders. The IRS imposes a 10% early withdrawal penalty on top of regular income taxes. To cite an instance, withdrawing $10,000 from a traditional IRA could net you only $6,400 after federal taxes, state taxes, and penalties. The damage extends beyond immediate costs. That same $10,000 left untouched for 20 years with a 6% annual return would grow to more than $32,000.
You claim Social Security at 62 and your monthly benefit drops by up to 30% compared to waiting until full retirement age. Delay until age 70 and your payment increases by 8% each year due to delayed retirement credits. The break-even point falls in the late 70s or early 80s. This makes patience rewarding for those with average or above-average life expectancy.
Long-Term Financial Oversights That Drain Your Nest Egg
Healthcare expenses represent one of the most underestimated retirement mistakes to avoid. The average couple needs $345,000 to cover medical expenses in retirement, excluding long-term care. If you have that figure, it stands at $172,500. Medicare covers only about two-thirds of your costs and leaves you with big out-of-pocket expenses for premiums, copays, and deductibles.
Long-term care planning is another retirement blunder to avoid. Nearly 70% of people turning 65 will need some form of long-term care. A semi-private nursing home room averages over $111,000 a year. Assisted living exceeds $70,000 per year. Premiums become unaffordable or coverage unavailable after age 70 if you don’t purchase insurance in your 50s.
Conclusion
We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”
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Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Dale Soutas. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party . The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.
This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency
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