Retirement Horror Stories

Planning to retire well causes anxiety for many people across northern Michigan. Today we’re going to look at some retirement horror stories. Specifically we’re going to look at eight retirement mistakes and how to avoid them. Number one is not saving enough for retirement. About one in every five Americans, age 50 and older and have no retirement savings. And more than half are concerned they won’t have enough to last through retirement. This is according to an AARP survey from April 2024. Many individuals who don’t have adequate savings might find that they have to work at least part-time in retirement. Number two, pulling too much money from your investment accounts early in your retirement years. When you stop working, you’ll have plenty of free time to fill with your hobbies and other activities. A spirit of adventure is healthy for you on multiple levels. However, it is important to have balance between the vacations and other activities you do versus the amount of money you withdrawal from your investments. Number three, starting retirement too early. The age at which you decide to retire, depends on a few factors, including your goals, health and overall financial situation. Obviously, the earlier your choose to retire, the more you will need to have saved for your retirement. You need to plan for any unexpected costs in retirement, as well as consider your health insurance needs. If you retire before age 65, you will have to purchase your own health insurance until your qualify for Medicare. Number four, allowing your tax bill to erode your investment balance. A big risk Retirees face is tax rate risk. Tax rates are set to increase in 2026 due to expiring tax provisions that are in the Tax Cuts and Jobs Act of 2017. If you are still working, you can consider shifting your savings into tax-free accounts to lower your risk. This could include Roth IRAs or Roth 401Ks. Another option for pre-Retirees as well as Retirees is a Roth conversion. Number five, relying too much on Social Security. You can start claiming your Social Security benefits as early as age 62. Your benefit amount will increase every year until you reach age 70. One of the most common questions I get is when should I start receiving my Social Security income? When you decide to start your Social Security income depends on multiple factors. If your Social Security isn’t sufficient to cover your expenses, you’ll need to pull income from other sources or potentially have to work part-time. Number six, helping too many family members. When you retire and look at your retirement nest egg, you have built amazingly. You have enough to help others financially. Before loaning or giving funds to others though, it could be helpful to review not only your current income needs, but also try to estimate your future income needs. As nice as it is to help others, you don’t want to risk your own financial wellbeing. Number seven, focusing on money, but overlooking your mental and emotional wellbeing. The financial portion of your retirement is key. But we also like to discuss with our clients the emotional, social and psychological aspect of retirement. Money alone doesn’t tend to provide a satisfying retirement. Too often, when people retire and don’t have their work community, they can feel a lack of purpose. It is important to plan for this and consider what your community will be when you retire and what will provide you with a sense of fulfillment. Number eight, making random and risky investments. Scammers make a point of targeting Retirees. Proceed with extreme caution if you’re contacted by a stranger or even someone you know about investment opportunities. Speak with a trusted financial professional before deciding to make an investment, especially if it is an investment in a product you don’t completely understand. We just walked through eight different retirement horror stories to avoid. Obviously, the list could be much longer. Whether you’re in retirement or still working and planning for your retirement, your financial wellbeing is very important. We don’t recommend that you try and go it alone. We’d be happy to sit down with you and discuss your specific situation. Feel free to contact us to schedule a free, no obligation meeting so that we can help you plan to retire well.