9 Mistakes You Must Avoid To Survive Retirement

 In Retirement

survive retirement

People have been telling you for years now that retirement is a state of mind. You might just now be figuring out what that means. The thought of not working might be appealing to you, but you will need to account for money somehow and some way.

Retirement does not mean you sit around and do nothing. In fact, many people become even more active in retirement than they were outside of it. If you want to survive retirement, here are nine mistakes that you will want to work hard to avoid.

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Early Retirement

There are many reasons to keep working. For one, you may find that you have trouble filling the days with productive activities when you retire. No matter how much you love the game of golf, there are only so many rounds you can play a week.

In addition, if you retire too early, you may find that it is difficult to make your money comfortably last for the extended lifespan that many Americans are enjoying today.

Even if you need to cut back your hours in the years leading up to retirement, try to avoid officially announcing the big event until you are certain that you are ready – both financially and emotionally.

Applying Early for Social Security

Many young baby boomers have been contributing to Social Security since the ripe young age of 16. As retirement approaches, you will be more than ready to begin drawing a return on that investment.

Avoid the temptation to take the money early, however, as you will lose thousands of dollars over the course of your lifetime. If you elect for early Social Security, be aware that your monthly payments will be reduced for the rest of your life.

Find a way to wait for a few years until your official retirement age, and you will enjoy full payments well into your golden years.

Stop Working in Retirement

If you are healthy, there is no reason that you cannot continue working a bit while in retirement. This is also a way to keep you emotionally in the game.

Many people are defined by what they do. Do not feel that you have to put an abrupt end to your working life just because you reach a certain age. If you want to make a bit of money on the side, go for it!

Withdrawing IRA Money Early

Your IRA is another area of temptation. As you near retirement, the amount that you have accumulated might look like a great way to begin taking those exotic vacations that you have been dreaming of for years.

Just like Social Security, however, you will want to wait as long as possible to begin making withdrawals. Not only that, you will want to make sure you stay within your annual withdrawal limit to avoid triggering a tax penalty.

If you take the money out early, keep in mind that you can get hit with a federal tax levy of up to 20 percent. That is certainly no fun, so leave it in there as long as you can. That is, after all, why you made those regular contributions all those years.

early retirement

Making Risky Investments

If you want to survive retirement, now is not the time to be making risky investments. Those days have passed you by.

This is not to say that you should not be putting the money you have to work for you, but it does mean that you want to avoid investing in speculative stocksthat promise you an island, but deliver a junk yard!

You want to look for stable dividend paying stocks that will provide you with a steady income that will help you survive retirement and enjoy it.

Avoiding Bond Investments

Bonds are where the safety in retirement lies. Many people avoid them because they do not carry the sex appeal that other types of investments have, but again, those days of looking for the glitz and glamor in life are behind you.

You want safety, and you want returns. You will find both in bonds, so look for them as a part of your portfolio as you enter your retirement years.

Buying Annuities Early in Retirement

Annuities are not always a wise investment, to begin with, but they are definitely something to avoid during retirement. They offer a low rate of return that diminishes even further the older that you get.

Many people tend to buy annuities during the early years of their retirement on the promise that they will get income down the road. You will be much better off by properly diversifying your nest egg into more stable investments designed to protect your wealth.

Avoiding Opportunities to Downsize

Now that the kids are grown and it is just the two of you, do you really need that five-bedroom house with a swimming pool? In fact, do you even want it?

Do not avoid the opportunity to downsize when it presents itself to you. All of the money that you will save in monthly expenses alone could help fund your retirement for years to come.

Downsizing also gives you the freedom to pack up and leave on vacation whenever you want, and that is what you deserve.

Stop Worrying About Health

If you want to survive your retirement, make sure that you keep your health insurance active and that you are working to safeguard against physical and emotional complications that come with old age.

If you are in bad health in retirement, your medical expenses alone can wipe out everything you worked for. Do not let that happen by making the mistake of dropping your laser-like focus on your health.

These are nine mistakes that you will want to work hard to keep from making in retirement. With a bit of foresight and planning, you can enjoy your golden years on the money you have worked hard to accumulate.

Make it last for you by following some sound advice that will allow you to sleep well at night.

happy retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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