Retirement should be a time to relax and enjoy the rewards of your hard work, but poor planning can quickly turn those golden years into stressful ones. A 2022 Natixis Global Survey of 2,700 financial professionals across 16 countries revealed the most common mistakes people make when preparing for retirement—and many of them come down to time.
According to these advisors, the two biggest pitfalls are underestimating how long retirement will last and how much inflation can eat away at savings. Let’s take a closer look at the top 10 mistakes. Contact our Wausau WI retirement team today to learn more.
TOP 10 RETIREMENT PLANNING MISTAKES
- Underestimating the Impact of Inflation: Nearly half (49%) of advisors say this is the most common mistake. Over time, rising prices erode the purchasing power of your savings. What costs $50,000 today could easily cost double or more in 20 years. If your plan doesn’t factor in inflation, you may find yourself with less buying power than expected.
- Underestimating How Long You’ll Live: Thanks to advances in health care, many people are living well into their 80s and 90s. Yet 46% of advisors say clients don’t plan for the possibility of living longer than average. Running out of savings is one of the greatest risks in retirement.
- Overestimating Investment Income: It’s easy to assume that investments will always deliver strong, steady returns. But markets fluctuate, and counting on overly optimistic growth can leave a gap between your expectations and reality.
- Investing Too Conservatively: Some retirees move their money into “safe” investments like bonds or CDs. While this can reduce risk, it also limits growth—and may not keep up with inflation over decades of retirement.
- Setting Unrealistic Return Expectations: On the flip side, some investors expect high returns year after year. When those expectations don’t align with market realities, it can throw off long-term planning.
- Forgetting Health Care Costs: According to the survey, 39% of advisors say health expenses are one of the most overlooked aspects of retirement planning. Medicare doesn’t cover everything, and out-of-pocket costs can add up quickly—especially in later years.
- Failing to Understand Income Sources: From Social Security to pensions to personal savings, it’s crucial to understand where your retirement income will come from and how reliable each source is. Misunderstanding income streams can lead to budgeting surprises down the road.
- Relying Too Heavily on Public Benefits: While Social Security can play an important role in retirement, it was never meant to be the sole source of income. Depending too much on it can leave a significant gap in your finances.
- Underestimating Real Estate Costs: Owning a home doesn’t mean you’re done with housing expenses. Property taxes, maintenance, insurance, and potential downsizing costs can all take a bite out of retirement budgets.
- Investing Too Aggressively: Just as being too conservative carries risks, so does being overly aggressive. Market downturns can have a bigger impact if your portfolio isn’t balanced with your time horizon and risk tolerance.
THE BOTTOM LINE IN WAUSAU WI
The survey makes it clear: retirement planning isn’t just about saving money, it’s about anticipating the challenges of time, health, and changing markets. By avoiding these common mistakes, you can build a more secure plan that lasts as long as you do.
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