Retirement Read Time: 4 min

Navigating Retirement Pitfalls

Much is written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Some classic financial missteps have been known to plague retirees, too.

Calling them “missteps” may be a bit harsh, as not all of them represent errors in judgment. Either way, becoming aware of these potential pitfalls may help you to avoid falling into them in the future.

Managing Social Security. Social Security benefits are structured to rise about 8% for every year you delay receiving them after your full retirement age. Is waiting a few years to apply for benefits an idea you might consider? Filing for your monthly benefits before you reach your full retirement age can mean comparatively smaller monthly payments.1

Managing medical costs. One report estimates that a healthy couple retiring at age 65 can expect nearly $208,000 in out-of-pocket medical expenses during the course of their retirement, even with additional coverage such as Medicare Part D, Medigap, and dental insurance. Having a strategy can help you be better prepared for medical costs.2

Understanding longevity. Actuaries at the Social Security Administration project that around a third of today’s 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not only reasonable, but it should be expected.3

Managing withdrawals. You may have heard of the “4% rule,” a guideline stating that you should take out only about 4% of your retirement savings annually. Each person’s situation is unique but having some guidelines can help you prepare.

Managing taxes. Some people enter retirement with investments in both taxable and tax-advantaged accounts. Which accounts should you draw money from first? To answer the question, a qualified financial professional would need to review your financial situation so they can better understand your goals and risk tolerance.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your investment strategy for tax considerations.

Managing other costs, like college. There is no “financial aid” program for retirement. There are no “retirement loans.” A financial professional can help you review your anticipated income and costs before you commit to a long-term strategy, and help you make a balanced decision between retirement and helping with the cost of college for your children or grandchildren.

1. Social Security Administration, 2021
2. HealthView Services, 2021
3. LongevityIllustrator.org, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

The Utility of Sector Investing

The Utility of Sector Investing

Successful sector investing is dependent upon an accurate analysis about when to rotate in and out.

Countdown to College

Countdown to College

Preparing for college means setting goals, staying focused, and tackling a few key milestones along the way.

2016 Tax Data You Should Know

2016 Tax Data You Should Know

Like it or not, taxes are part of life. Understanding them could help your tax-saving strategy.

 

Have A Question About This Topic?







Thank you! Oops!

Can Group, Private Disability Policies Work Together?

Loss of income from disability has the potential to cause financial hardship. Disability insurance can help.

Tax-Advantaged Health Care Planning for Retirement

Heading into retirement with confidence is easier if your planning includes steps to minimize taxes, especially as it relates to health care planning.

A Penny Saved is Two Pennies Earned

Here are some simple and inexpensive energy-saving tips that may help you save money.

View all articles

What Is the Dividend Yield?

This calculator helps determine your pre-tax and after-tax dividend yield on a particular stock.

How Much Home Can I Afford?

With a few simple inputs you can estimate how much of a mortgage you may be able to obtain.

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

View all presentations

Estate Management 101

A will may be only one of the documents you need—and one factor to consider—when it comes to managing your estate.

Once Upon a Goal

Do you know how to set up your financial goals for success? This knight does.

Retirement Redefined

Around the country, attitudes about retirement are shifting.

View all videos