If you want to retire at a reasonable age, you'll likely need to do some in-depth financial planning. Those who don't take great care and consideration when planning their retirement run the risk of either working until an advanced age, or struggling to get by financially during their twilight years, or worse yet, running out of money before your time comes.
Do you want your retirement to go as smoothly and successfully as possible? If so, it's best to avoid these four common retirement mistakes in Niles, Illinois.
1. Retiring Prematurely
Perhaps the biggest mistakes people make when retiring is doing so too early. While the prospect of retiring young is certainly exciting, it's not always a prospect which fits well with reality. Some individuals are forced to pinch pennies during their post-retirement years simply because they retired too early.
These individuals often sacrifice significant amounts of money that they wouldn't miss out on if they were to work just a few more years. Working a few more years might feel painful at the time, but most people are happy they did so after they've retired comfortably a few more years down the line. We know of one couple who retired when the husband was 57, taking a discount on his stock options, bonuses, and future income. They then bought a boat and traveled the world for 18 months. The husband is STILL ALIVE at age 97. But, he ran out of his investments two years ago, at age 95.
2. Handing Money Over to Independent Children
Another common mistake that many individuals make is handing over excess amounts of money to their independent and adult-age children. If you're giving your child thousands of dollars at one time when he or she could be earning money by him or herself, you could be missing out on substantial retirement savings, while at the same time depriving your children of productive, income-earning years because they are "living the good life" instead of working for their retirement
This isn't to say that you should let your child struggle financially. Helping them occasionally with a few dollars now and then probably won't hurt your savings remarkably. But, if you give your children large amounts of money on a consistent basis, you may be hurting your retirement savings exponentially.
In the long run, this could affect not only you, but your children as well.
3. Prematurely Taking Advantage of Social Security
Legally, the earliest that you are allowed to take advantage of social security is at 62 years of age. However, just because you can take advantage of social security at this age doesn't mean that you should.
By taking out social security at 62 instead of 67, you could reduce your total benefit by up to 30%. This is a great deal of savings that you are potentially foregoing. While waiting the extra years could be difficult, it's the financially wise thing to do. And, if you wait past normal retirement age, your Social Security check will grow each year, by 8%, until age 70.
4. Not Investing Enough
The last retirement misstep we'll discuss is not investing enough money. At times, some individuals invest conservatively because they are afraid their investments will fail.
The problem is, when they don't invest, their assets have less opportunity to grow with inflation or interest. When it's 30 years down the line, their $5,000 might still be $5,000 under their mattress, or in a checking account. If they had invested the $5,000, it might be worth $10,000 or more, depending on the investment. It goes without saying, this could be a huge loss in potential savings.
Plan Your Niles Retirement Properly with a Local Estate Planning Lawyer
Want to be sure that you avoid these financial missteps? Then it's wise to hire a Niles estate planning lawyer. Interested in hiring an estate lawyer in Des Plaines? We here at John J. Pembroke & Associates have you covered.
Our team of lawyers has helped a wide variety of clients to plan and schedule their retirements. Utilizing our vast legal and financial knowledge, we can help you avoid the common pitfalls of retirement planning. With over 30 years' experience, we are the team to turn to.
Contact us today to schedule an appointment!