7 Things You Should Never Do in Retirement

June 27, 2024 DINARRECAPS8

Adam Palasciano Tue, June 25, 2024

Retirement: A magical time of life when you no longer (necessarily) have to work for your money. Instead, decades of hard work coupled with saving and smart investments should mean that your money now works for you.

Careful financial planning can certainly lead you to this outcome. However, there are several things you’ll want to street clear of to ensure that you don’t end up in financial trouble after you call it quits at work.

Here are seven things you’ll want to seriously avoid if you’re approaching retirement or you’re already retired, according to Ameriprise and Think Bank.

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1. Retiring Too Early

Deciding to stop work too early can have long-term implications on how long your money will last you. If it’s clear that you don’t have enough money saved, consider working for a few more years to augment your retirement savings. As a general rule of thumb, it’s important to save at least 15% of your annual income toward retirement throughout your working life — or more, if you can.

2. Overspending

Many people find themselves on a reduced or fixed income in retirement. So, it’s really important to make sure you’re not overspending. Creating a clear budget can help you track where your money is being spent each month, ensure you’re not living above your means, and help you stay out of debt.

3. Taking Social Security Too Early

It’s possible to collect Social Security as early as age 62. However, you’ll only be eligible for a portion of your maximum monthly benefit by doing so. The longer you wait to collect Social Security, the larger your monthly payment will be for life. So, waiting longer can have huge long-term impacts on your cash flow and financial stability.

4. Underestimating Effects of Inflation

You won’t be immune to the effects of inflation just because you’re retired. It’s crucial to consider how even low levels of inflation ranging from 1-2% can erode your purchasing power. It’s best to consult a financial advisor to devise an investment strategy that mitigates the effects of inflation once you’ve stopped working.

5. Underestimating Medical Expenses

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