What to do and what not to do while planning your retirement


Retirement planning usually begins when we get our first job. Our employer often contributes, and we set aside money from our paychecks for this purpose.

A quiet retirement is the ultimate goal of our working years. However, without realizing it, we may find ourselves facing a retreat of hardship, insufficient funds, and worries. People often make many mistakes in retirement.

Here are a few to avoid.

Retiring too early

We often mistakenly assume that our current lifestyle can be maintained at its current level and amount. When we look at the money we have saved, which seems to be enough to sustain our current lifestyle, we may mistakenly believe that the future will be exactly the same as it is today. As we have seen recently, inflation can change the economy with the rising cost of gasoline and the rising prices of food and basic necessities.

If we retire too soon, we may not have enough savings to overcome these situations in the future. There can be no assurance that our current expenses will be the same as our future expenses.

Moreover, we wrongly assume the length of our particular lifespan. For many of us, we have an assumed age that we will live to, usually between 75 and 80. However, as seen by some very famous people (former President Jimmy Carter who is still alive at 98, actor Kirk Douglas who lived to be 104, actress Betty White who lived to be 99 years), we may live much longer than we think. Having enough retirement savings is essential to be able to enjoy retirement, no matter how long we live.

Retiring too late

Even if you love your job, there will be a time when you want to relax. It’s important to make sure your reason for working is the love of the job and not the fear of retirement.

Time spent with your family, grandchildren, or even working with your favorite charity can enrich your life and make the world a little brighter. It’s important to know when it’s time to put our professional life behind us so that we can enjoy our free time while we are physically able.

Not planning for diminished health.

You may have always been the picture of health, never missed a day of work, and always ate your vegetables. Yet nature and time have a funny way of catching up with each other. Your health could deteriorate and medical costs could significantly reduce your retirement savings.

It is always better to overestimate your future needs than to find that you have significantly and detrimentally underestimated them.

Use of retirement funds as a source of loanable funds

Hard times are hitting us all, especially now, and it’s tempting to dip into your retirement account to cover those tough times. Once the money is taken out of your account, those dollars no longer earn interest or generate a return. You are sacrificing the growth potential of your money.

Also, paying off the loan may be more difficult than you think. It is best to borrow from your retirement account only during this time when you have no other option.

The best advice anyone can give you to avoid retirement mistakes is to consult a financial planner. He or she has experience dealing with the ups and downs of the market and how best to handle the ups and downs of retirement. Using the experience and training of the financial planner is the best way to have a peaceful retirement that lasts as long as you do.

Mary Fox Luquette, MBA, CLU, ChFC is an instructor in finance at the BI Moody III College of Business at the University of Louisiana at Lafayette.

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