5 retirement mistakes to avoid

Retirement requires a lot of careful preparation, but no one is perfect, and we sometimes make both financial and planning mistakes along the way.

Here are five common slip-ups—and how to avoid them:

1. Mistiming a spouse’s Social Security claim
   Sure, you know the benefits of waiting to take Social Security. Benefits decrease by more than 40 percent if you start taking them at age 62 instead of waiting until 70. But where Jeff Gitterman, CEO of Gitterman & Associates Wealth Management, sees people trip up most is on a younger spouse’s Social Security claim. 
   
   Let’s say that a husband and wife are 70 and 66 years old. If the husband is taking full Social Security, his wife can take a spousal benefit, which can be up to half of her husband’s benefit. This won’t affect the husband’s benefit, and it allows the wife’s benefit to mature. At 70, she can stop taking half of her husband’s benefit and start taking 100 percent of her own. This is especially important for a younger female spouse because women tend live longer then men. Women also spend more on medical care and are more likely to enter a nursing home.
2. Thinking it’s too late to start
   Saving for retirement can be intimidating if you got a late start, but don’t let fear stop you from putting away as much money as you can. Start by making sure you’re maxing out your contributions to any current work retirement accounts, especially if your company matches them. 
   
   If you’re 50 or older, you can make catch-up contributions. In a traditional or Roth IRA, you can put away $6,500 a year, which is $1,000 more than people younger than 50 can contribute. If you put away money through a 401(k), you can contribute up to $23,000 a year, compared to $17,500 for younger savers. 
3. Not picturing what retirement will be like
   Gitterman prompts clients to close their eyes and ask themselves this question: “On the first day of retirement, what am I doing?” Frequently, the response is “I don’t know.”
   
   A job gives back a lot of things other than money: accomplishment, leadership, fulfillment, and the satisfaction of work completed. If you don’t know how you’ll replace these parts of your life, retirement can feel empty. Taking time to explore what this new chapter of life looks like will not only help you plan for retirement mentally, it will help you plan financially as well—you need to know what your money is going to fuel. 
4. Keeping retirement accounts separate in retirement
   Maybe you have a 401(k) from an old job in one brokerage house, your current 401(k) somewhere else, and a pension in yet another spot. That’s not such a big deal while you’re still working, but when you retire and start taking benefits, it’s easier on you—and your future heirs—if everything is in one place.
   
   That way, you or your financial planner can figure out where to take distributions from, and when the time comes, your executor will have everything in one place, which will make that job easier during what will be a difficult time. 
5. Putting money before lifestyle
   Retirement shouldn’t be about hitting a certain dollar number, but rather about saving enough for the retirement you want to have. “Money should support your lifestyle, not be your lifestyle,” says Gitterman. For some, that means traveling the world. For others, it means working part-time. For some, retirement is as simple as sitting on the beach and reading a book. All three require different funding.  
   
   “I have people walk into my office and swear they can’t retire, and then an hour later they’re putting in their retirement papers,” he adds. For many people there is a disconnect between their retirement savings and how much their desired post-retirement lifestyle will actually cost, explains Gitterman. Making that connection can help you time your retirement appropriately and save more—while you’re still working.

The opinions expressed in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.