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.
Regret Number One: Failed to Save Enough MoneyThe 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.
Regret Number Two: Retiring Too EarlyAll 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 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.
Regret Number Three: Failure to Consider Possible Health ProblemsNo 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.
Preparing for a Better RetirementYou 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.