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Avoid These Common Retirement MistakesBy: Nicholas Breit, CFA, CFP®, Senior Consultant, DiMeo Schneider & Associates
Saving for retirement and subsequently navigating through retirement can be a daunting task. While countless websites and books are devoted to retirement planning, the reality remains that Americans still struggle to sufficiently plan for retirement. A survey by the Employee Benefit Research Institute (“EBRI”) found that 60% of workers did not know how much money they needed to fund their retirement. The following discourse highlights several common retirement pitfalls and solutions to avoid taking such costly missteps.
Retiring Too Early/Underestimating Retirement Expenses
One of the biggest challenges with retirement planning is factoring in life expectancy and how long your retirement assets will need to last. According to the Social Security Administration:
- A 65-year-old male is expected to live, on average, until age 84.
- A 65-year-old female is expected to live, on average, until age 86.
- Roughly 25% of 65-year-olds will live at least to age 90 and nearly 10% will live past age 95.
Given the potential for longer life expectancies, it is even more imperative to formulate a thorough plan to account for a retirement that could potentially span 30 or more years. In conjunction with life expectancy, retirement expenses play a critical role as well. A common expenses, however this general rule may or may not be applicable to each individual’s particular situation. Experts generally agree that spending increases slightly at retirement (extra time for vacations, home projects, etc. initially) and then declines as retirees age.