7 Unrecognizable Signs of Retirement Troubles Ahead
Written by
Ashleigh Ray, AI Editor
Edited by
Ashleigh Ray
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Retirement should be a time of relaxation and enjoyment, a well-deserved break after decades of hard work. But sometimes, without even realizing it, you might be setting yourself up for a less-than-ideal retirement.
Here are some sneaky signs that you might be heading for trouble, and what you can do to steer back on course.
You Haven’t Updated Your Retirement Plan in Years
Life changes fast — so should your retirement plan. If the last time you checked your retirement plan was when “Lost” was still airing new episodes, it’s time to take another look.
Changes in your income, marital status, health or family situation can drastically affect your retirement needs.
What to do: Schedule an annual review of your retirement plan. Adjust your savings goals, investment choices and expected retirement age as needed to reflect your current life situation and future projections.
Your Emergency Fund Is Non-Existent
It’s easy to underestimate the importance of an emergency fund. But not having one can force you into dipping into your retirement savings earlier or more frequently than planned, which can severely impact your financial security later on.
What to do: Start small if you have to but start. Experts suggest setting a goal to save at least three to six months’ worth of living expenses. Keep this fund separate from your retirement savings and only use it for actual emergencies.
You’re Unaware of Your Monthly Spending
If you don’t keep track of where your money goes each month, you might be spending on things that aren’t really adding value to your life.
This can lead to less money saved for when you really need it during retirement.
What to do: Use an app or simple spreadsheet to start tracking your expenses. See where you can cut back and redirect that money into your savings or investment accounts.
You Assume Social Security Will Cover All Your Needs
Social Security is a helpful supplement to your retirement income, but it’s unlikely to be enough on its own. Relying solely on these benefits can lead to a rude awakening when you finally retire.
What to do: Think of Social Security as just one part of your retirement income. Make sure you have other income sources set up, such as a 401(k), IRA or other investments.
Your Debt Is Growing, Not Shrinking
Entering retirement with significant debt can strain your finances, especially if your income drops as expected.
High-interest debt from credit cards or loans can eat into your retirement savings faster than you might think.
What to do: Focus on paying down high-interest debts first. Consider talking to a financial advisor about strategies to manage or consolidate your debts.
You Ignore Healthcare Costs
Healthcare can be one of the largest expenses in retirement, so ignoring the potential costs associated with aging can be a critical mistake.
What to do: Look into long-term health insurance options and consider contributing to a Health Savings Account (HSA) if you’re eligible. Make sure to factor in the cost of healthcare, including potential long-term care, in your retirement planning.
You Haven’t Thought About Inflation
The price of goods and services will rise over time, and your retirement savings need to keep pace. If your retirement plan doesn’t account for inflation, you could find your buying power significantly diminished as you age.
What to do: Ensure your investments are diversified and include options that have the potential to outpace inflation. Consult with a financial advisor to balance your portfolio appropriately.
By keeping an eye out for these often-overlooked signs and making the necessary adjustments, you can help ensure that your retirement is as comfortable and stress-free as it should be. Remember, the best time to fix potential problems is before they actually become problems.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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