Although I've been awash in it plenty of times, I've never been a big fan of regret; to me, it's the evil cousin of grief. Whereas the things I grieve are usually outside my sphere of control, regrets are due to mistakes I've made and must live with.
As I dive into retirement planning, I've looked at what current retirees say they regret most, and I'm trying to learn from their experiences.
Image source: Getty Images.
Not putting enough aside
When I read that retirees regret not saving enough money, my first reaction was to remember how tough it's been to prioritize saving at various times in my life.
Earthly existence feels so fleeting, and it's natural to want to experience it while it's still possible to get out there and have fun. And let's face it: Having fun costs money. I've gone on weekend trips with friends, bought a car I've always wanted, and seen my favorite band in concert even though ticket prices were astronomical. All that money could have gone into a retirement plan, but my fear of missing out has pushed reason aside.
The takeaway: It's taken me decades to figure out a plan that works for me. After years of paying all our bills and contributing the money left over to a 401(k) or IRA, I turned the plan on its head. About a decade ago, I drew up a new household budget, and the first expense on the list was retirement savings. The remainder of our budget is built around the money left after retirement has been taken care of.
It's surprising how quickly a retirement account grows once it becomes your priority.
Not planning for fun
Speaking of fun, the retirement-planning software company Boldin says that one of retirees' top regrets is not putting more thought into the fun they want to have when they stop working. Though many may have assumed they'd spend less money once retired, that doesn't tend to be true -- particularly in the first few years.
Between spending money on hobbies, dinners out with friends, and vacations, having fun adds up. Mike Niemczyk of MLN Retirement Planning says, "Too many clients are running out of money before they run out of life."
The takeaway: I don't want to sit around and watch television after my husband retires, and I also don't want to wait for people to visit. I want to live while we can, so I've factored fun into our miscellaneous expenses in retirement. Ideally, he won't retire until our retirement budget (including fun money) hits its target.
Not planning for the unexpected
I don't know about you, but every time something really bad happens, like a tornado taking the roof off the house or a pet needing unbelievably expensive surgery, I tend to think, "Well, that will never happen again."
Deep down, I know that even if that specific event doesn't occur again, something else will. Not planning for a flooded basement, an unexpected healthcare cost, or a bear market is the surest way to watch a chunk of money we're counting on get sucked down the tubes forever.
The takeaway: By adopting the old Dale Carnegie method of dealing with worry, I've learned to imagine the worst. I promise, it sounds far more dismal than it is. Here are the three steps Carnegie said we should take:
- Ask yourself: "What's the worst that can happen?" By imagining the worst-case scenario, we can name and confront our fears.
- Accept the worst. Prepare yourself for the reality that it might happen.
- Improve on the worst. Concentrate on what you can control. For example, I may not be able to control the impact of a tornado on our roof, but I can make plans to pay for it.
No matter what emergencies come our way in retirement, I'm focused on putting enough money into an emergency account (or easy-to-access cash equivalent) so that unexpected events won't upset our entire retirement plan. While I never want to retire, my husband does. And to be candid, the need to build these accounts has set his earlier retirement plans back by a few years. Still, it's a vital part of trying to avoid financial regret.
Taking debt into retirement
Another top regret is taking debt into retirement. I've spent a ridiculous amount of time focused on it. Three years ago, we made our 24th move. While it's been exciting to live in different states and countries, all those moves meant we were never in one place long enough to pay off a house. What's more, moving so often meant we were at the mercy of the housing market wherever we moved, and of the interest rates at the time.
It was our decision to live our lives that way, and I don't regret it (other than the whole "Eek! We still have a mortgage" thing). However, the math is simple: The more debt you carry into retirement, the higher your cost of living will be and the more you must save to maintain your lifestyle.
The takeaway: Since I know we'll still have a mortgage when my husband retires, I've spent the past few years getting rid of all other debt. And because we plan to recast our mortgage several times in retirement (recasting is the process of reducing a mortgage balance through a lump-sum payment), I've also been putting extra into an employer-sponsored retirement plan for that purpose.
Your situation will be different than mine. But if you have any debt as you move toward retirement, focus first on high-interest debt and make moves to reduce your overall cost of living.
As someone who truly dislikes the feeling of regret, I'm doing all I can to prepare us for retirement. At the same time, I'm 100% sure I'll make mistakes in the process. Maybe the best any of us can do is minimize those regrets to the best of our ability.
