According to the University of Michigan Health and Retirement Study, many older Americans have high regrets about their financial situation.
According to the survey, nearly 60% regret not having saved more money for retirement. 40% regret not purchasing long-term health insurance. 37% regret not working harder. And 23% regret taking Social Security early.
Financial regrets don’t need to last forever. You can still make changes to your financial plan even after retirement.
Four expert tips on how to avoid financial mistakes during retirement.
1. Prepare for future long-term health care costs
Celeste Robertson, an attorney, wrote that “one mistake people can make is to not plan for long-term health care, such as the need for assisted living or nursing homes, which could deplete assets and strain their families.” Robertson’s Texas-based law firm offers legal services in the areas of family law, estate and probate planning, guardianship, and other related matters.
According to the U.S. Administration on Aging, “A person turning 65 has a 70 percent chance of requiring some form of long-term support and care in his or her remaining years.” They need care for an average of three years.
The cost of long-term care is often thousands per month. Medicare doesn’t cover long-term care in nursing homes, so you will need to come up with another source of funding.
2. Inflation is taken into account
According to survey conducted by Edward Jones and Harris Poll between January and March 2023, nearly two thirds of retired people said that inflation and rising costs of living were the “biggest shocks” to their retirement.
The respondents cited the inflation rate as the shock most often. This was more than any other three responses: unexpected medical expenses (22%) or major repairs or expenses for the home (20%).
It may be necessary to review your finances if you haven’t taken into account inflation in your previous retirement plans.
Lena Haas of Edward Jones’ wealth management solutions and advice wrote an email saying that it is never too late for action.
3. Keep track of your investment portfolio
You may want to update your investment and/or withdrawal strategy to make your retirement money last.
In an email, Andrew Meadows wrote that it’s not a good idea to treat your retirement savings as “set and forget”. Meadows is the senior vice-president of Ubiquity Savings + Retirement, responsible for HR, culture and brand.
4. Be prepared for the unexpected
Your finances should be prepared to handle unexpected events, even if you have a high monthly income.
Justin Prasad is a North Vancouver financial advisor. He says that when people plan their retirement budget, they often forget to include large expenses. Prasad warns that unplanned expenses, such as roof replacements or large medical bills can cause financial problems.
Those problems may be more difficult to solve today than they were in the past. The cost of unexpected expenses may be higher than in the past, and you will also spend more for your daily costs.
You can recover from an unexpected financial blow in retirement. However, the options you choose will depend on your situation.
Prasad’s clients have taken out reverse mortgages or delayed retirement. They may also take up part-time jobs, reevaluate the timing of certain income sources, etc. Prasad recommends consulting a financial adviser to determine the right option.