Are you ready to relax and put the 9 to 5 behind you? If so, hopefully you have a good retirement plan in place. If it is not quite time, be sure to start planning. A good, comprehensive retirement plan is essential if you want to retire comfortably. But, even with a good plan, it is possible to make costly mistakes. These errors may leave you wondering how you are going to live on such little income. Here are some mistakes to avoid in planning your retirement.
Be sure your retirement goals are reasonable
Most people don’t really know where to start, when it comes to retirement planning. That is because most people have no realistic idea of how much money they will need to maintain their lifestyle once they retire. Some believe they need much more than they really do, which unnecessarily makes their retirement goals unachievable. While others set their goals much too low, which ultimately results in financial problems during retirement.
Prepare for potential increases in health care costs
Possibly the most important, yet most overlooked, issue in retirement planning is being prepared to cover your future health costs. While it may be difficult to do, it is really essential to estimate your likely health care costs to be sure that you have sufficient income to cover them. The reality is, as we age, our need for health care typically increases. So does the costs of treatment. According to one report, a 65-year-old couple retiring in 2015 will pay an average of $266,589 in healthcare costs. It is not safe to assume that Medicare will cover all of those costs. So, you need to be prepared.
Take into consideration the possible need for long-term care
For those who have the experience of caring for an aging parent, you know that the time and expense of providing that care can be significant. The medical expenses associated with a short-term illness can be enough to exhaust your savings. So, the possibility of needing long-term care must be considered in retirement planning. It is projected that 70% of individuals who have reached retirement age, will need long-term health care. So, consider your long-term care options ahead of time, and you can successfully plan for them.
Make sure you have sufficient savings put away
If you start saving for retirement now, you will have a much better chance of accumulating sufficient money to provide for a comfortable retirement. That is just common sense. The sooner you start putting money aside, looking for growth, initially, then, as you near retirement, perhaps preserving principal in an interest-bearing account, the more money you will have. If you have an IRA or a qualified plan, such as a 401(k) your growth can be greater because it is tax deferred. Even greater growth can take place if your employer matches your contributions.
Update your retirement plan as necessary
Do not overlook the need to periodically revise your retirement plan. You should do this at least every couple of years, just to make adjustments for the changes in investments, income and expenses. Any significant life event, like the birth of a child or a marriage, would be a sure sign that it is time to review your retirement plan. If you fail to keep your retirement plan current, it is more likely that the plan you have will not sufficiently meet your retirement goals.
If you have questions regarding avoiding mistakes in retirement, or any other retirement planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Gerald M. Dorn, Estate Planning Attorney
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