It wasn’t until the 1980s that folks started thinking of a dignified retirement. 401(k) s were not a thing until 1978. The Roth IRA did not exist until 1997 as a result of the Taxpayer Relief Act of 1997.
When you think about it, retirement is a new concept, maybe only 2 generations old.
Most folks do not know this!
Before that, most Americans worked until they died.
It wasn’t until the 1980s that folks started thinking of a dignified retirement. 401(k) s were not a thing until 1978. The Roth IRA did not exist until 1997 as a result of the Taxpayer Relief Act of 1997.
That’s not a long time ago!
And yet…we are expected to know how to save for retirement.
Since we have not evolved, we are bound to make mistakes.
“It wasn’t until the 1980s that folks started thinking of a dignified retirement. 401(k) s were not a thing until 1978. The Roth IRA did not exist until 1997 as a result of the Taxpayer Relief Act of 1997. ”
Here are the 11 top retirement mistakes to avoid:
You think you will die young – but what if you don’t? There is no crystal ball! Taking that Social Security benefit at 65 might look attractive, but you are looking at a much bigger payout if you can wait until 70.
You ignore the complications of social security – what happens when a partner dies? What if you are both self-employed? Do you get your free annual report from the Social Security Administration detailing your benefits? If not, it’s time to look into this.
You go into retirement with debt – need I say more? Handling this debt from retirement savings will serve to dwindle the amount you have to live. This can influence whether you are using extra funds to pay down existing debt.
You don’t have long term care insurance – folks often underestimate that they will need some assistance in their golden years.
You assume you will work long after 70 – fact is, most leave the workforce earlier after 70 than they thought. Job loss, ageism, and physical limitations are real. You might be leaning on retirement savings for as long as 20 years!
Fail to plan – like with anything else, no plan = no ability to know what’s next. And that’s harder to swing in old age.
Underestimate medical costs/expenses – many folks underestimate their medical expenses or overestimate Medicare. Having a clear honest projection of medical expenses is a good idea.
Withdraw from your retirement savings too soon – new house, new investment, vacation home …these can seem like good ideas, but withdrawing from your retirement too soon can leave you with many years of financial exposure.
Filing taxes separately – there are advantages to filing together, including a higher income threshold for making contributions to your tax deferred retirement accounts. Make sure you discern the full view of the impact of filing separately on your retirement and social security.
️Wait too long to start – this speaks for itself, although later is better than never!
Do not plan to take advantage of tax breaks – Tax breaks can make a difference, but they require research and/or the experience of a CPA. Make sure you don’t leave money on the table by NOT investing in the appropriate professionals.
So, what is a couple to do?
Talk!
Grab a cup of coffee and sit down with your partner and go through these questions. What do you understand? Where do you need more information? Make a plan. Do you need an accountant? Do you need a personal financial planner? Do you know what to do next? Make the calls together so that you make the first step into retirement planning a teamwork process.
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