7 things you shouldn’t do when you retire

Some of the first things retirees do when they retire include applying for Social Security benefits, checking their investment accounts, and updating estate plans. on the other side of the coin, What New Retirees Should Avoid doing?

Some of the answers may surprise you. Avoid making the following mistakes that could hurt your retirement savings and lifestyle.

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Don’t Be Too Rigid With Retirement Spending Plans

There’s nothing wrong with carefully reviewing your spending habits in retirement. However, it is a good idea to avoid being too rigid in your plans.

The need for retirees to be flexible with their retirement spending plans is due to the sequence-of-return risk.

Jesse Cramer, Relationship Manager at Cobblestone Capital AdvisorsSaid investing often has bouncy returns. Often, we see a row of good returns (bull markets) or bad returns (bear markets) over several years. Starting your retirement with a few years of poor returns leaves the portfolio under disproportionate stress.

“The main weapon retirees have to counteract the unfortunate sequence of returns is to stay flexible in their retirement spending plans,” Cramer said. “Return-of-return risk gets worse when a retiree takes money out of their portfolio. The more money they take out, the bigger the risk.”

Cramer recommends that retirees consider delaying some of their expenses — eg, postponing a big trip. This will give the market and their portfolio time to recover and reduce the risk of sequestration of returns.

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Don’t forget to plan for Social Security

You are not required to take Social Security benefits at the time you retire.

While you can still receive benefits as early as age 62, think carefully about whether you should start or delay collecting by then. You can delay Social Security until age 70 to receive the full payment. Choosing the optimal strategy to fit your financial situation and overall lifestyle, whether that means paying off at age 67 or waiting until age 70, can potentially add thousands of dollars to your retirement years in income. . Senior couple paying their bills.

Don’t Spend Your Investment Capital (If You Can Avoid It)

Bob Sewell, CFA and CEO Belvedere Investment Management, recommends that their clients avoid withdrawing more than 4% of their portfolio value from their accounts year after year. Withdrawing more than 4% means you’re spending some of your investment capital — and retirees need this capital for many years of retirement ahead of them.

If you’re spending more than 4%, Sewell recommends creating an spending plan to see what amounts of capital can be exhausted from year to year without running out of money. Part of the plan should be looking at where you draw your money from among your various investment accounts. senior new flat screen tv

don’t take loan

Ideally, by the time you reach retirement, you should have paid off all of your debt, including student loans, mortgages and credit card balances. If you have paid off your outstanding loan, do not take any additional loan.

“You don’t need that burden in retirement when your income is potentially low, and you don’t have the same ability to supplement it through employment sources,” Sewell said. “Carrying credit card debt from month to month, lines of credit or a new mortgage rarely makes sense, so do your best to avoid it.” Senior Woman Clipping Coupons.

don’t rely on an inheritance

Sewell often sees clients who anticipate windfall gains from an inheritance to aid in their retirement. Relying on an inheritance, regardless of the amount, is not a retirement plan.

“The inheritance you are expecting may be much smaller than you expected, may not be received for many years, or may not appear at all,” Sewell said.

A better approach is to look at an inheritance as a bonus to your retirement plan.

senior health care

Don’t underestimate the cost of health care

Health care is one of the most important expenses in retirement. It is not uncommon for retirees to underestimate the amount of money they need for health and medical insurance purposes.

Once you become eligible for Medicare, make sure you thoroughly understand what is and is not covered by your Medicare plan. This will allow you to better budget for medical expenses and be prepared to cover costs that are not insured by Medicare. Financial advisor showing documents while talking to senior couple at home.

Don’t DIY All Your Retirement Planning

You don’t need to do all your retirement planning yourself. It can also be difficult to manage a retirement plan alone in the event of unforeseen circumstances, such as the death or disability of a partner that leaves the surviving partner with a challenging financial burden.

Sewell recommends finding a trusted trustworthy advisor or financial professional who can help ensure that your investments are well managed and that you and your family are in good hands after retirement.

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This article originally appeared on GOBankingRates.com, 7 things you shouldn’t do when you retire

The views and opinions expressed here are the views and opinions of the author and do not necessarily represent those of Nasdaq, Inc.

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