Retirement is supposed to be a golden time when people reap the rewards of having worked hard and spent wisely throughout their working lives. Not only do retirees have more time on their hands, but they are supposed to have more money available thanks to 401(k) and other retirement savings plans. Unfortunately, that golden time can be significantly dimmed if retirees don’t save appropriately during their careers. Here are some of the top things today’s retirees wish they’d known about retirement savings earlier.
The Importance of Budgeting
Many people create a monthly budget or a budget for each paycheck, but many retirees regret not creating a retirement budget before leaving their jobs. Retirees who are used to living paycheck to paycheck often struggle in retirement because they don’t know how to allocate their funds; without a budget, some may worry that they’re going to run out of money before the end of their lives. Unlike paychecks, retirement funds don’t keep coming until the recipient decides to quit, so it’s vital to create a written plan for how to use the funds and how to make them last. You can also use online budgeting sites like LearnVest, which can do the calculating and budgeting for you.
Financial Guidance is a Must
Retirees often regret going into retirement blindly. They may think they have time to figure out how to use their money, may not realize how complicated the process is, or may have difficulty transitioning into retirement. Whatever the reason is, retirees who don’t seek out financial guidance before they retire often regret it. Financial planners can advise retirees on which assets to use first in order to minimize their tax burdens, how to invest some of their funds wisely, and how to put their financial affairs in order to ease the burden on their heirs. Retirees who don’t talk to a financial planner ahead of time often panic, make unwise decisions or become overwhelmed with the responsibility of handling their retirement funds.
Don’t Wait Too Long To Start Saving
The more a person puts away toward retirement, the bigger the nest egg once he or she finally retires. Unfortunately, more than half of retirees regret not saving for retirement earlier. Theoretically, people can begin saving the moment they get their first job; however, many think retirement is too far away to think about or don’t feel they can afford to put anything into their retirement accounts. In addition, some people make the mistake of thinking Social Security payments will cover their financial needs during retirement. As a result, people have to keep working longer to meet financial obligations or retire on far less than they could have had they started saving years earlier. Most retirees think it would have been better to struggle more while they were working so that they could put more aside for retirement. A good savings plan is to open an IRA to supplement your 401(k) and Social Security payments. Many online investing sites like E*TRADE can help you set up an IRA for retirement.
Not Rushing Into Retirement
By law, people must start taking withdrawals from their IRAs and 401(k)s once they reach the age of 59 and a half and are eligible to receive Social Security at 62. However, that doesn’t mean that they should retire as soon as possible. Retiring too early can cause financial stress because of loss of income without enough retirement savings to replace it. Many retirees feel they would have enjoyed retirement more had they kept working full-time for longer, put aside more for retirement, and paid off their mortgages or other debts before retiring.