Last week, over at U.S. News – Money, there was a post by David Ning that we’d like to talk about today: “Habits That Can Ruin Your Retirement.”

Everyone has bad habits. Often we know what our bad habits are, but sometimes we are unaware that we’re even doing them. Ning’s list may be some habits you have picked up without even being aware of it. Or if you’re aware, you may not realize your habit may have a negative effect on your retirement.

  • “Treating retirement as the destination rather than the beginning of another part of life.” For many people, retirement can last for decades. If you think of retirement as being the finish line, what about those thirty years that are going to come after? What do you consider that time of your life if retirement was the destination? If you don’t view your retirement as another stage of life to be planned and lived to the fullest, you more than likely are going to struggle greatly once you reach your so called finish line and realize there is much more to it.
  • “Believing retirement will solve all your problems.”If you have a job you hate, then it’s easy to think that if you could just retire, everything would be better. But this is most often not the case. While your job is an important part of your life, you also have many other aspects that will affect your retirement: your spouse, family, lifestyle, health, hobbies, etc. What’s going on with those aspects? How is your relationship with your spouse? Do you have hobbies you enjoy? Do you take time to take care of your health? Retiring from that despised job is not going to affect these other areas. If you have problems elsewhere, retirement won’t fix them, it actually might make them worse.
  • “Anchoring a spending number against your previous salary.” ­– Planning your retirement based on a percentage of your salary (often 70% – 80%) is a common practice. This number is often used as a benchmark for how much retirement income you will need (therefore how big your portfolio needs to be). It can be very useful in helping you decide how much you need to save while you are working to get to that income. But it will do no good for you to plan your income this way and ignore your expenses. Reviewing your expenses and building a retirement budget that will take into account your drop in income is imperative to a successful retirement. If you plan on living on 70% of your former salary, but wait until you retire to discover you were spending 80% of your former salary, you’re in for a major headache.
  • “Avoiding investment risks.” – We don’t often talk about investments here, and we won’t today, other than to say we’ve seen people approaching and entering retirement that are so averse to potentially losing money, they hoard their portfolio in cash. If you consider your money needs to stretch over decades, this is likely not the best way to handle your investments (just because your balance is not eroding through investment loss doesn’t mean your portfolio will be worth as much in 10 years as it is now).
  • “Stop being active.” Relaxation is one of the things many retirees probably look forward to. But be careful not to go too far. If you allow yourself to become too inactive, you’ll likely face a decrease in your health and enjoyment of your retirement years.

Retirement should be one of your main goals. It lasts too long and can cause too much stress if unplanned for.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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