Retirement marks the start of a new chapter filled with opportunities for relaxation, travel, personal growth, and more. However, a financially stable, smooth transition requires careful planning to avoid common pitfalls. Here are eight mistakes to sidestep as you prepare for your golden years.

1. Underestimating Healthcare Costs

Healthcare is one of the largest expenses in retirement. According to Fidelity’s Retiree Health Care Cost Estimate, an average 65-year-old may need around $165,000 for healthcare expenses for the rest of their lives. That can be a lot! That’s why it may be beneficial to consider your strategy for supplemental Medicare plans and long-term care insurance in your planning to avoid depleting your savings.^[1]

2. Claiming Social Security Too Early

While you can start receiving Social Security benefits at age 62, doing so reduces your monthly payout by as much as 30%. Waiting until full retirement age (66-67, depending on your birth year) or even delaying until age 70 can significantly increase your benefits. However, depending on your unique financial situation and especially your life expectancy, it may be beneficial to claim earlier. Just make sure your decision is based on a well-informed strategy.^[2]

3. Failing to Diversify Investments

Relying too heavily on one asset class, like stocks, can be risky. Consider diversifying your finances across many investments, income options, and savings vehicles to balance growth and stability. As you near retirement, it’s increasingly important to have a stable financial situation around which you can construct your life.^[3]

4. Ignoring Inflation

Inflation erodes purchasing power over time. A 2% inflation rate could cut the value of your savings in half over 35 years. If you don’t have a plan to address inflation over the course of your retirement, you may see your hard-earned savings fall short over the course of your retirement. You can protect against this by seeking investments that compensate for inflation, but make sure they still work with your overall retirement goals before shaking things up.

Avoiding Mistakes to Achieve Financial Security

Retirement planning is a complex process, but avoiding these common mistakes can help you achieve financial security and peace of mind. As you approach your official retirement date, it’s all the more costly to make a mistake that could set you back, especially without as much time to rebuild savings. Consulting with financial professionals, staying informed, and regularly revisiting your plans can set the foundation for a fulfilling retirement. Call us now to get well on your way to enjoying the retirement you deserve.