10 Most Common Retirement Mistakes in 2023

Last Updated April 26, 2024

Most Americans do not begin to think about retirement until they are in their 40s or 50s. This is just one of many retirement mistakes that Americans make when planning out (or not planning out) their golden years. The sooner someone takes action regarding their retirement, the more money they will have to use throughout their retirement. The longer you wait to save, the harder it will be to accumulate enough to live on when you do reach retirement age.

Besides waiting too long to save, what are some other retirement mistakes that are made? Final Expense Benefits dives deep into common retirement planning mistakes and discovers the top 10 global mistakes as discussed in the Global Retirement Index (GRI). The GRI was created in 2012 in order to track the trends of retirement around the world and their object is a simple one, “to provide policymakers, employers and the public at large with a comparative tool for seeing where the factors are best aligned to ensure a secure retirement”. While there are plenty of other factors in regard to retirement mistakes, the ones in the GRI discussions encompass a broad view that you can take into personal consideration.

10 Retirement Planning Mistakes

With inflation being the highest it’s been in over 40 years, markets going down due to the recession, and the ever-increasing risks to retirement growing throughout the world, it is incredibly important to recognize retirement planning mistakes ahead of time to secure your financial future. According to the GRI, the following are the ten most common retirement mistakes one can make

1. Underestimating Inflation Impact

Inflation is at record highs and thinking this will end soon can be an incredibly detrimental mistake in your retirement plans. Supply chain disruptions, the global pandemic, and company record profits all contribute to the rising costs at the gas station and grocery stores. Contacting a financial advisor to help you navigate the market’s volatility as pensions decrease and bonds are affected is advised when trying to steer clear of retirement planning mistakes in general but can help when understanding how inflation will affect your retirement.

2. Underestimating How Long You Will Live

While it is a good thing that our lifespan has increased over the past decade in the United States, underestimating our lifespan is among the biggest retirement mistakes we can make. People all over the world are living longer lives and need to figure out how much money they will need to live without going back to work in their 80s and 90s. You most likely will live longer and need to take into account that longevity to ensure your money lasts as long as you do.

3. Overestimating Investment Income

Investment income is what you may be getting from a bank’s interests or dividends you get from stock you own. While this money is excellent to have you may be overestimating how much you are getting each year and how far it will carry you in your retirement. Long-term investments may see short-term turbulence and the amount you are calculating to get now will almost certainly change and even decrease in the coming years. This is among the comment retirement mistakes due to the fact that most seniors think these investments will carry them until the end of their lives.

4. Lack of Balance in Investments

Conservative investing is defined as preserving the purchasing power of your money while risking as little as possible. While this is traditionally the smartest route, you may find your investment funds incredibly lacking to deal with the increasing costs of retirement. Having a variable investment portfolio with some high-risk/high-reward investments will go a long way in increasing your potential for generating wealth while on retirement. Research alternatives to traditional investments can also help you to buffer the increasing costs of retirement. However, the other side of the coin can be just as dangerous as far as retirement mistakes go. Being too aggressive in your investments and constantly seeking high-risk opportunities can leave you with nothing to show for it. The key to making the most of your investment portfolio is balance and understanding when to risk and when to be more conservative.

5. Unreal Expectations on Return Investments

You may be thinking that your investment portfolio or your pension will carry you throughout your retirement which is a retirement mistake most seniors make. Your investments will most likely fluctuate as the market does. Even alternatives like real estate can decrease during our record-high inflation. If you are the majority of retired Americans living on a fixed income, you will find it especially difficult to keep pace with inflation and rising costs. Over the last year, pension plan averages have decreased by over 10% globally and will hit seniors trying to retire now more disproportionately. Sitting down and looking at your return investments and your spending habits now will help you avoid future retirement mistakes.

6. Healthcare Costs

Forgetting to factor in healthcare costs is a huge retirement blunder. Healthcare costs for the average senior couple can exceed $300,000 during retirement. You may be healthy now but our health takes significant dips as we age. Planning for our health can go a long way, especially when trying to decide which is the best state to retire in. Healthcare costs are on the rise and it is wise to try and figure out trends in costs and what you may need in the future. Among the most prevalent retirement mistakes; healthcare costs can not only mount for you but may put a financial strain on your loved ones should you pass.

7. Failing to Understand Your Finances

Knowing where your money is going is important but many folks do not think to factor in where they are getting their income from. Knowing how far your pensions, investments, and social security will get you is the difference between running out of money and having enough saved up to last the rest of your life. If you have borrowed money against your IRA or retirement, you will have a lot less money to work with during retirement. An example of this is taking more out of an IRA or 401k account too soon when you do not start making Required Minimum Distributions (RMD) until your early 70s. One of the most common retirement mistakes, especially for low-income earners trying to make ends meet. Keeping money growing with compound interest is the best way to go if you have an IRA. Try not to touch these funds unless an emergency arises.

8. Relying on Public Benefits

Gone are the days when we could rely on Social Security to carry us to the end of our lives. Ideally, public benefits should help us live in modest comfort until we die but as people live longer and benefit ages increase; we put ourselves in danger of running out of money before we even get to benefit age. Politicians are trying to solve the problem by cutting benefits to seniors and extending the retirement age. This practice will leave many vulnerable seniors out of a way to retire. Too many Americans are relying on public benefits which will inevitably drain our reserves, making it one of the biggest retirement mistakes on our list. Being able to plan in advance and saving as soon as possible will be the key to knowing how comfortable your golden years will be. Try not to take Social Security benefits too early and hold out as long as possible in order to make the most of your benefits.

9. Underestimating Real Estate Costs

You may think that once you find the best state to retire that you can make money off your real estate properties but this may not be the case. Recurring expenses may not cross your mind if you think buying and renting your property will be your cash cow into retirement. Outside of mortgage costs, there are maintenance costs and costs of marketing your property to potential buyers. With inflation at record highs, you will have to be mindful of people being able to afford your property and that there will be a loss of income during times of vacancy. Like with most retirement planning mistakes, having all of your eggs in one basket can cause you to lose more money.

10. Leaving Expenses for your Loved Ones

Planning out your retirement is incredibly important and figuring out how to make your dollar stretch is stressful in itself. But have you thought about when you pass? Will you have saved enough money to cover your final expenses like your burial or your final debts? Most Americans do not think about this in their retirement because they are focused on expenses when they are alive, and rightly so. Nevertheless, the financial burden of your passing could affect your family and exacerbate their grief. Planning ahead with final expense insurance is the best option for this circumstance to avoid this and other retirement planning mistakes.

Final Expense Insurance and Retirement

When figuring out retirement mistakes, one of the biggest of all is leaving your grieving family to figure out your funeral planning and debts. When navigating retirement, we know the steps needed in order to avoid common retirement mistakes but we often forget all of the expenses that go into our final moments. Final expense insurance, also known as burial insurance, is life insurance designed to cover costs related to our deaths to ease the burdens on our loved ones. With rising costs of living and inflation, we will already plan how we spend each dollar while alive. Most seniors will neglect to save for their funeral costs, which can cost over $9,000 on average. That is money we cannot afford to go without during our golden years as public benefits dwindle and our out-of-pocket expenses grow.

Best Final Expense Insurance for $10,000

These $10,000 coverage policies have steady and affordable premiums for the life of the policy. If you are looking for great coverage to assist with after retirement final expenses, we recommend these top carriers for all of your final expense needs This is Final Expense Benefits best $10,000 insurance policies for seniors.

Company	50 y/o Male	50 y/o Female	60 y/o Male	60 y/o Female	70 y/o Male	70 y/o Female
Aetna (CVS Health)	$34	$27	$51	$40	$73	$58
Americo	$39	$34	$52	$41	$86	$65
Mutual of Omaha	$30	$24	$43	$32	$74	$53
Prosperity	$36	$30	$47	$37	$81	$60
Corebridge	$55	$38	$68	$53	$106	$80

These figures were obtained from the NFDA and are estimates only. For a detailed quote, please contact an agent.

Final Expense Benefits partners with over 20 carriers with customer satisfaction guaranteed. They offer no medical exam options at much more affordable rates that fit your needs. Some of our highly-rated carriers include:

If you are looking for trusted and affordable final expense insurance, the experts at Final Expense Benefits have got you covered. Call one of our talented agents today at 1 (866) 311-4338 to get an affordable quote with one of our highly-rated insurance carriers.

Takeaways from Avoiding Common Retirement Mistakes

The main takeaway from this article to avoid making retirement planning mistakes is to think about your savings as soon as possible. Keep on track, or get on track, if you are among the majority of Americans who have neglected their retirement planning. If you are still working it is not too late to find the best final expense insurance to care for your loved ones and to create a financial plan. If your employer has a 401k or an IRA plan, take advantage of it and contribute the maximum amount that you can. Research the stock market and learn to invest wisely to avoid making retirement mistakes such as having an unbalanced portfolio and overestimating how much you will be taking home.

Sources

Investopedia- Retirement Mistakes
Investopedia- Real Estate for Retirement

Global Retirement Index

Frequently Asked Questions

Do I need burial insurance if I already have life insurance?

Traditional life insurance is intended to replace lost income when a loved one dies but may not cover all after-life expenses. Burial insurance can be added to ensure all costs are covered.

What does burial insurance for seniors cover?

Burial insurance for seniors covers all final costs like the funeral, headstone, casket, and other afterlife expenses. It can also cover the medical bills that have accumulated after death.

What are the options for burial insurance for seniors over 60?

The best options for burial insurance for seniors over 60 can be found on the Final Expense Benefits website. Our team of trained agents will work with you to find the best burial insurance policy for you.

Does burial insurance for seniors ever expire?

Nope! Burial insurance is a type of whole life insurance so your coverage will never expire as long as you pay your premiums.