Big Retirement Regrets and the Means of Avoidance
Mountaineering offers many opportunities for regret, especially the young climber’s formative years. The man who chased his pack into a 2,000 foot deep crevasse on Mt. Denali on May 15, 2017, surely regretted not clipping it to his harness. Years ago I regretted not putting my snowshoes on and stubbornly post-holing for two hours in deep snow, as I later shook uncontrollably from hypothermia caused by excessive perspiration. Poor choices produce painful results for retirees, too, which are generally felt when little or nothing can be done to change them. Consider the following retirement regrets, and the means of avoiding them as you plan for your own golden years.
Regret #1: Not saving enough. A recent study published by the National Bureau of Economic Research (NBER) showed 57% of retirees regret not having saved more money.¹
Solutions: have a retirement plan in place and follow it. Make conservative planning assumptions with rates of return, taxes, and inflation. Capitalize on tax-advantaged retirement accounts, especially those matched by your employer. Work longer and consider a part-time job in the early years of your retirement.
Regret #2: Inadequately preparing for health care costs. The recent NBER study revealed 40% of retirees regret not more carefully planning for health and long-term care costs.²
Solutions: assume future health and long-term care costs increase faster than other budget items in your planning. Take great care of yourself with daily sunshine, nutrition, exercise, and sleep. Formulate a plan for your late-life care and share it with your children.
Regret #3: Retiring too early. Thirty seven percent (37%) of respondents to the NBER study felt they left the workforce too early.³
Solutions: while working longer is the obvious solution to such a regret, the benefits go well beyond better finances. The intellectual and relational engagement a job or career provides is often critical to a person’s well-being. For the same reason, make sure your inspirations and talents continue in full function to the benefit of others when you do retire, which will be a blessing to you.
Regret #4: A poor decision with Social Security. The NBER study indicated 23% of retirees wished they had filed for Social Security later.⁴
Solutions: have a detailed retirement income plan at least 10 years prior to retirement, including Social Security optimization. Work part-time for the first 3-5 years of your retirement so you can delay Social Security payments, which will reduce or extinguish reductions for taking it prior to Full Retirement Age, and enlarge those payments for life.
Think about it, Shaun.
“Where there are no oxen the manger is clean, but abundant crops come by the strength of the ox.” ~Proverbs 14:4
1,2,3,4 Financial Planning, “4 big retirement regrets – and how to avoid them”, by Nathan Place, January/February, 2023
The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.
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