A 2019 survey by Global Atlantic Financial Group, which sells annuities, asked more than 4,000 Americans, pre-retirees and retirees, about their retirement savings. Of those surveyed, 55% said they had regrets. The top three were that they:
- Hadn’t saved enough
- Relied too much on Social Security
- Hadn’t paid down debt before retiring
However, you can avoid some of this remorse, by taking steps now for your retirement planning. Let’s look at how you can avoid those major retirement regrets.
Failing to save enough. The Fidelity Investments’® Retirement Mindset Study (2019) found that 62% of respondents were confident about their current financial health. However, when people looked ahead to their retirement finances, that changed. Part of the issue is planning. Only 18% of the survey respondents had a financial plan for retirement. Without planning, it’s hard to know if you have enough saved. See how much you’ll be spending in retirement. Go through your expenses and increase your savings. The most common financial surprises for retirees are inflation and unexpected medical costs. You may find this AARP® Retirement Calculator helpful.
Depending too much on Social Security. Rather than looking at Social Security as your main source of income in retirement, view it as one of several legs of a stool. Social Security isn’t designed to provide all the necessities of life. It’s supplemental. It isn’t intended to be replacement income. Your retirement planning should include other resources, including:
- Tax-advantaged retirement plans
- Taxable investment accounts
- Personal savings
- A health savings account
- Income from businesses or properties
Not paying off debt before you retire. For retirees on fixed incomes, debt makes it difficult to really enjoy retirement. Therefore, retire any debt you have before you stop working. You should systematically focus on one debt at a time, while making minimum payments on other debts. Get started by targeting the debt with the highest interest, or perhaps the one with the smallest balance. The goal is to be debt-free in retirement, so your financial resources can go toward helping you enjoy life. However, you shouldn’t concentrate too much on paying down debt and overlooking your retirement savings.
The best way to avoid these regrets is to do your retirement planning. Start now and evaluate your situation. Then develop a retirement roadmap that helps you get from today to tomorrow.