Top Financial Mistakes That Affect Your Retirement
As retirement approaches, more and more Baby Boomers are taking stock of their financial decisions along the road to their golden years. About 4 million people retire every year, as of 2014. From 2014 to 2034, about 80 million people are expected to retire, and this wave of retirements is seen as a significant challenge for the Social Security and Medicare systems in the United States.
How prepared are you? Do you know all the details of your pension plan (if you’re lucky enough to have one)? But long before you close the chapter on your working days, make sure you are making the right financial choices, or they could end up with disastrous outcomes.
1. Planning To Work Past Retirement Age
One in four U.S. workers expects to work beyond age 70 to make ends meet, according to a recent survey. But, whether you work past age 65 is not always up to you. About half of retirees leave the workforce earlier than planned, because of employment-related issues (changes in the company, being laid off, lacking the skills to keep up), or health-related issues (either their own ill health or that of a loved one).
2. Not Saving Early Enough
The single biggest financial regret of Americans is waiting too long to start saving for retirement. By putting off saving for retirement, the clock is ticking against you with every day that passes.
3. Claiming Social Security Early
You’re entitled to start taking retirement benefits at 62, but you probably shouldn’t. Most financial planners would recommend waiting at least until your full retirement age. Waiting until 70 can be even better.
Let’s say your full retirement age, the point at which you would receive 100% of your benefit amount, is 66. If you claim at 62, your monthly check will be reduced by 25% for the rest of your life. But hold off until age 70, and you’ll get a 32% boost in benefits – 8% a year for four years – thanks to delayed retirement credits. Claiming strategies can differ for couples, widows, and divorced spouses.
The best advice is to start saving early, and consult with a financial planner, so you can put together a smart, well-structured strategy.
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