There are many mistakes that people make when planning for their retirement. Among the most common mistake is neglecting to plan out your retirement income – the things that will keep you afloat after retirement. The following mistakes aren’t only the most common, they’re the easiest to avoid!
Not Budgeting Specifically For Retirement
it’s a far too common trend in retirement age people to not have a firm budget to live with. Even if you think you have a budget in your mind, you’ll find that having a specifically written down budget to keep your spending consistent. Don’t just live by old-wives tales like ‘you’ll only need 80%’ of your pre-retirement income – be proactive and focused on what your fixed expenses will be. Having a strict budget can be stressful or frustrating at times, but it’s worth it to know you’ll have that little bit of extra money when the grandkids need spoiling.
Not Writing Down the Income Plan
Just like you’ll want to have a specific budget written down, you’ll want to have a specific income plan written down. This may be a novel idea, since you likely didn’t have an income plan before retirement – for most people, their paycheck is their ‘income plan.’ During retirement, your accrued wealth will be yours to put in order and form into an income plan – social security, investments, pensions, annuities, and more. having this written down not only keeps it in order, but makes it easier for when you need to see a planner.
Co-Mingling Your Money
This is something that your written plans will help with. In fact, separating out your money based on purpose is likely something you’ll need to do as you consider your budget and income plans. Many people simplify this process by separating their money into three purposes
- Living Expenses – Social Security, Pension, and similar investments should be used for your more consistent and required living expenses.
- Health Care – Your real estate, alternate investments, and insurances should be used for larger expenses, or for bolstering your income later on when inflation hits.
- Growth – If you expect to be around for a good long while, use your market-based investments like stocks and mutual funds to promote a healthy and growing wealth reserve.
These three mistakes are very common throughout the entirety of our society, and you should never take for granted if you understand what your money is doing. Take a little bit of time every few years to really consider the future of your money and what you expect from it. This will ensure a stable, comfortable, and fulfilling retirement.