September 18, 2013
Do You Make These 7 Retirement Mistakes?
A satisfying retirement doesn't just happen. When I stopped working in 2001 I assumed a lot of things that turned out not to be true. My early years were a work in progress with a lot of on-the-job training. Over time, the pieces began to fall into place. The last six years have been the most creative and joyful period of my life. But, some incorrect assumptions made the transition rougher than it had to be.
Here are seven "assumptions" that can derail or delay your happy retirement lifestyle:
1) Assume everything will work out the way you want. Your left a job, you didn't leave planet earth. No one gets through any stage of life without a few curve balls here and there. Some of us actually take a fastball to the head. Being flexible is a necessity.
2) Assume your planning is solid and will need little or no adjustments. Much like the assumption above, for me retirement has proven to be a time of constant adjustments. My goals, interests, and financial situation are not static. Neither is my 5 or 10 year plan. And, that is OK.
3) Assume your wife or husband has the same goals as you for retirement. Assuming anything in a long term relationship is risky, but thinking that you and your spouse or partner want exactly the same things from retirement without discussing it first is not likely to be your best decision. Save a lot of grief by talking through what you both want before you are home full time.
4) Assume your employer will not change any of your retirement benefits. Read the paper and the Internet. It is safer to assume your employer will look for ways to reduce his commitment to your pension and health care. He isn't evil, he just can't afford to fulfill promises made years ago. The world has changed too much.
5) Assume you (and any one else you are responsible for) will never have a serious health problem. Just because you have been healthy so far is absolutely no guarantee of the future. Flip a coin and have heads turn up four times in a row. Assuming that tails is "due" is wrong. Past behavior or conditions do not always predict the future, especially with an aging human body.
6) Assume that when you retire a budget is no longer needed. A budget got you to retirement. A budget will get you through retirement. In fact, when your income is more likely to be fixed, you have less margin for error than when a regular paycheck was part of your world.
7) Assume you can spend heavily in the early years and then cut back as you age. In a world that was completely predictable, this might work. But, what happens when you are faced with a large health care bill several years down the road? What happens when your income drops because your investments are not producing at the same level? What happens if you are wrong and expenses don't drop enough to make up for your lavish years? Front-loading your retirement with a more lavish lifestyle comes with substantial risk.
Of course, there are more than just the seven deadly sins of retirement assumptions I have listed. In your experience so far, what mistake has been most costly to you? What would you do over again if you could?