Create Retirement-Planning Decisions That You Won’t Regret Later

Create Retirement-Planning Decisions That You Won’t Regret Later
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Mike Valles
11/29/2023
Updated:
11/29/2023
0:00

While most people look forward to the day they retire, many fail to prepare for it. Without the proper decisions and preparation, there could be a lot of regrets later and no way to go back and do it over. Many retirees say they wish they had committed more time to better financial planning.

One survey, according to FoxBusiness, revealed that 85 percent of retirees surveyed said they wished they had the opportunity to go back and plan better. They found that some things altered their retirement planning that they had not counted on in their younger days, such as inflation and fluctuations in the market.

Regret Number One: Failed to Save Enough Money

The biggest regret among retirees is not having enough money put away for retirement. They wished they had started saving sooner or putting more into savings than they did.
Ideally, retirement savings should start when people are in their twenties. CNBC reports that people in their twenties should aim to save 10–15 percent of their pretax income. Many people that age may find it difficult to save that much, but it is a goal they should aim for as soon as they can.

Regret Number Two: Retiring Too Early

All too often, many seniors retire earlier than they should. They make a decision to retire after they turn 62 and can claim Social Security. What many do not realize is that doing so greatly reduces the amount of money you can receive from the Social Security Administration (SSA).
The SSA reveals the difference you could make if you waited a few years to start getting Social Security benefits. In 2023, if you retire at 62, the maximum you can get from the SSA is $2,572. If you wait a few years and retire at your full retirement age, you could receive maximum benefits of $3,627 per month. Waiting until you are 70 in 2023, you would get a maximum amount of $4,555.

The difference between retiring at age 62 and 70 in 2023 means you could get $1,983 per month more just by waiting longer. The benefits do not increase once you reach 70. By waiting longer to claim Social Security, the larger amount means you would not need as much from other retirement accounts.

If you decide to go back to work after you retire, you could face another problem. The Internal Revenue Service places a limit on how much you can earn each year without having to reduce your Social Security benefits. If you are not yet at full retirement age for an entire year, the maximum amount you can earn without a penalty is $21,240.

When you make more than that, the SSA says you will have your benefit amount reduced by $1 for every $2 you earn above that amount. If you are not yet at full retirement age for the entire year, you can earn up to $56,520, but benefits will be reduced by $1 for every $3 over that amount—up until you are full retirement age for an entire month. After that month, you can earn as much as you want and not face any penalties.

Regret Number Three: Failure to Consider Possible Health Problems

No matter how good things look when you are younger in the way of job or career success, there is no way to count on having good health for decades to come. Poor health or health issues can derail the best talent and intentions. Sometimes, companies may want to downsize due to economic problems, which often means the seniors will be the first to go. You or your spouse could develop serious health problems, which could end up consuming much of your retirement funds.
Either way, you cannot always count on being able to continue to work after you reach retirement age. Savings are needed for medical care, which is getting costlier each year, and you or your spouse may need lots of it. Long-term care is another possibility, which costs about $108,000 per year. Forbes reports that the average cost of long-term care insurance for a 60-year-old man in 2023 is $1,200, but it will cost $1,960 for a 60-year-old woman for the same coverage (because women live longer than men). This kind of insurance costs more as you age.

Preparing for a Better Retirement

You can get more income in retirement if you do several things. Wait at least until you reach full retirement age to get Social Security benefits and put your retirement money into an after-tax account.

Roll your retirement accounts into Roth accounts—either a Roth IRA or a Roth 401(k). Money contributed to these accounts is with after-tax money, so there are no taxes on your withdrawals. You will have to pay taxes on all money you roll over, so only roll part of your money each year to reduce taxes. Roth accounts also have the benefit of not having any required minimum withdrawals.

Many seniors in the survey said they wanted an income every month. If you prefer that, you may want to consider getting a retirement annuity. Although you will pay tax on your withdrawals, they have two benefits. First, they can give you regular payments. Secondly, they give you a guaranteed lifetime of income—a benefit that other retirement accounts do not have.

You can help ensure that your retirement planning will be successful when you talk to a certified financial planner and work with them to create a plan that meets your needs. They can provide you with several ways to get more money in retirement—and pay less taxes.

The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Mike Valles has been a freelance writer for many years and focuses on personal finance articles. He writes articles and blog posts for companies and lenders of all sizes and seeks to provide quality information that is up-to-date and easy to understand.