5 financial mistakes to avoid in retirement

Key Points

  • When planning your retirement, there are many factors to consider.
  • It’s important to be aware of common mistakes that could set your retirement back.
  • Your Ameriprise advisor will provide personalized financial advice for a more confident retirement.

Personalized advice from your Ameriprise advisor can help you enjoy retirement with confidence and avoid five common setbacks.

1. Overspending

Given the free time and flexibility with retirement, it’s easy to overspend. Retirement could last 20 years or more, so it’s important to keep your lifestyle spending at sustainable levels.

2. Disregarding inflation

Inflation adds up over time. If you need $5,000 a month to live now, you could need $10,000 a month in just over 20 years to support the same standard of living. During retirement, it may still make sense to keep some assets invested in equities to grow over time and hedge against inflation.

3. Underestimating medical expenses

Medicare does not cover all health care expenses — including, for example, deductibles and copayments, as well as the cost of care for dental, vision and hearing conditions and long-term nursing home care. Your advisor will factor anticipated health care expenses and recommend solutions to help you prepare for uncertainty.

4. Undervaluing Social Security benefits

Social Security is a source of income that you can’t outlive, so deciding when to file for it is a critical step. While you can start collecting benefits as early as age 62, waiting to collect can pay off. For example, at age 66 (for someone born between 1943 and 1954, for example) you would receive 100% of your monthly benefit. At age 70, you would receive 132% of your monthly benefit. When you reach age 70, your monthly benefit stops increasing, even if you continue to delay taking benefits.1

5. Retiring too soon

The age at which you retire impacts your income and lifestyle. If you choose to retire early, it could result in lower Social Security benefits given less lifetime earnings that factor into the calculation. Early retirement also requires more assets to fund essential and lifestyle expenses, account for inflation and self-fund your health care before you are eligible for Medicare.

Maintaining a confident retirement

Your Ameriprise advisor can help you plan to sustain your income for the long-term. Regularly meeting with your advisor to review your goals, progress and investments can help you stay on track. You can always track your accounts and progress — anytime, from any device. Talk to your advisor to get started.