Five common retirement mistakes people make

Here are five common retirement mistakes people make:

  1. Not starting to save early enough: Many people put off saving for retirement, thinking they have plenty of time. However, compound interest can work in your favor if you start saving early. Even small, consistent contributions to a retirement account can add up over time. Aim to start saving at least 10% to 15% of your income towards retirement.

Mistake: Waiting until it's too late to start saving, or not saving enough.

  1. Not diversifying investments: It's essential to diversify your retirement portfolio to minimize risk. This means spreading your investments across different asset classes, such as stocks, bonds, real estate, and cash. Failing to diversify can lead to significant losses if one investment performs poorly.

Mistake: Putting all your eggs in one basket, or not regularly rebalancing your portfolio.

  1. Not considering healthcare costs: Healthcare expenses can be a significant burden in retirement. Many people underestimate the cost of healthcare, which can lead to financial strain. It's essential to factor in healthcare costs when planning for retirement.

Mistake: Not budgeting for healthcare expenses or assuming Medicare will cover all your medical needs.

  1. Not accounting for inflation: Inflation can erode the purchasing power of your retirement savings over time. Failing to account for inflation can lead to a reduced standard of living in retirement. It's essential to consider inflation when planning for retirement and to adjust your savings accordingly.

Mistake: Not adjusting your savings for inflation or assuming that your retirement income will keep pace with inflation.

  1. Not considering long-term care costs: Long-term care costs, such as assisted living or home care, can be significant. Many people underestimate these costs or assume they will be covered by family members or government programs. It's essential to consider long-term care costs when planning for retirement.

Mistake: Not budgeting for long-term care expenses or assuming someone else will cover these costs.

By avoiding these common retirement mistakes, you can set yourself up for a more secure and comfortable retirement. It's essential to start planning early, diversify your investments, and consider all the potential expenses you may face in retirement.