Regrettable Retirement Decisions


Confucius said, “Life is really simple, but we insist on making it complicated.” 

Unfortunately, that kernel of wisdom applies all too often to individuals preparing for one of life’s most important milestones: retirement.  Money-related regrets are real and often lack satisfactory solutions or do-overs.  The same is true for non-financial regrets.

The simplest (and best) strategy is to avoid regrettable retirement decisions in the first place.  Following are examples of those decisions.

  1. Lack of in-depth retirement planning.  Some individuals focus only on asset accumulation, a sum they believe will be magically adequate for retirement.  In reality, successful retirement depends, in substantial part, on the ability to generate a positive cash flow from the date of retirement until death.  Accumulated assets are just half of the story, the other half being expenses.  A seasoned, professional financial planner can assist with in-depth cash flow planning before you pull the retirement trigger.
  2. Underestimating the cost of healthcare. Healthcare is always expensive, but it can rapidly escalate with age for multiple reasons including long-term disability, dementia, medication, and so forth.  In addition, healthcare expenses are especially vulnerable to inflation. Long-term care insurance can be a highly effective strategy for minimizing financial hardship during retirement. Speak with a seasoned planner to learn if it makes sense for you.
  3. Ignoring the possibility of a long life.  A long and healthy life is a wonderful thing…unless you run out of money years before you die.  In the past, retirement planning typically assumed life expectancies of seventy-five to eighty years.  Today, people are living longer than ever, often into their nineties or beyond.  Smart planning requires an assumption that you will live well into your nineties…even if your parents and siblings died sooner. 
  4. Inflation and taxes. Future retirees sometimes forget that non-Roth retirement funds are taxable.  That million dollar 401(k)/IRA is not the same amount after you pay taxes on it.  The exact number will vary depending on your expenses and how and when you draw income from your accounts.  Historically, inflation erodes purchasing power by approximately three percent on average.  Smart planning considers the impact of both inflation and taxes.
  5. Ignoring non-financial factors such as social, structure, purpose, station. Work provides much more than money for us.  From it, we derive meaningful benefits such as social interactions, daily structure, purpose, and a sense of where we fit in the world.  Failing to consider how to cope with non-financial factors like these can partially derail even the best financial preparations. 

Don’t complicate your life! Regrettable retirement decisions are not limited to the above five, but avoiding them will go far toward ensuring that you have an abundant and satisfying retirement.  Smart planning is the key, and working with a seasoned retirement planning professional today will yield significant dividends tomorrow.

As Winston Churchill said, “Let our advance worrying become advance thinking and planning.”

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