Avoid These 15 Mistakes When Planning for Retirement

Retirement isn't the sort of thing you should jump into. Rather, it takes careful planning to achieve a financially secure retirement. But if you make these mistakes, you may find that your senior years are loaded with money-related concerns.

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Many people assume that they'll manage to work well into their 60s or 70s and, therefore, put off retirement savings. But you shouldn't assume you won't be forced into early retirement. Many people are, whether due to layoffs or health issues, so don't neglect your nest egg with the hope that you'll catch up later in life.

ALSO READ: Plan for an Early Retirement -- Even if You Don't Want One

Many people manage to work in some capacity once their primary careers wrap up. But you shouldn't count on being able to do so. Health issues or a sluggish economy could take part-time work off the table, so it's important to save well in case you can't generate income later in life.

Many people figure they'll need their nest eggs to last 15 or 20 years. But if you live a long life, you may need your savings to last a decade or more longer. That's why it really pays to pump as much money as you can into your IRA or 401(k) plan while you can.

Many people assume that their bills will magically shrink once they stop working. But your living costs may not actually change all that much. Take some time to map out a retirement budget so you know what income you'll need to live comfortably.

Healthcare is the one expense that's more likely than not to rise during retirement. It's important to save for those costs ahead of time. That could mean padding your nest egg or socking money away in a health savings account.

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It's a common myth that Medicare is free. Not so. You'll pay a monthly premium for Medicare coverage, and you'll also be on the hook for co-pays and deductibles. Those are costs you should account for in the course of your planning.

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Many seniors wind up needing some amount of long-term care. And the costs there can be prohibitive. Worse yet, Medicare won't cover the cost of long-term care, so you'll need to either save well to absorb it yourself or apply for long-term care insurance ahead of retirement.

Many seniors get most or all of their income from Social Security. But those benefits are only designed to replace about 40% of your pre-retirement income if you earn an average wage. Most seniors need twice that much money to maintain a nice lifestyle, so it's important to save on your own for retirement.

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Full retirement age is when you can claim the full monthly Social Security benefit you're entitled to. That age differs depending on when you were born, so it's important to commit that number to memory when planning for retirement.

If you and your spouse are both entitled to Social Security benefits, it pays to sync up on a filing strategy ahead of retirement. Doing so could help you get more money from the program while making it possible to meet your joint goals.

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Working full-time is actually a great way to fill your days. But when you stop doing that, staying busy can get expensive. Be sure to account for that when crunching numbers.

As retirement nears, it's smart to invest more of your savings in safe investments, like bonds. But if that milestone is at least a decade away, stocks are generally a better bet due to their stronger returns.

ALSO READ: Buying Municipal Bonds for Retirement? Beware This Pitfall

Many people opt to save for retirement in a traditional IRA or 401(k) because of the up-front tax breaks. But a Roth savings plan may be a better bet. That's because Roth accounts allow for tax-free withdrawals. At a time when you're on a fixed income, not having to pay the IRS is a good thing.

Many people figure that they'll owe the IRS a lot less money once they retire. But if you have multiple income sources, you might actually wind up in a higher tax bracket once you leave the workforce behind. It could pay to consult with a tax professional ahead of retirement so you don't face unpleasant financial surprises.

It's important to save well for retirement. But even if you're on track to retire with a few million dollars, it may not be enough to support the lifestyle you want. In the course of retirement planning, play around with different withdrawal rates from your savings. A $1 million nest egg, for example, may only leave you with $30,000 a year if you opt to withdraw conservatively, and that could mean having to adjust some plans.

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When you spend decades toiling away at a job, you deserve a comfortable retirement to look forward to. Avoiding these mistakes in the course of your planning could make it so your senior years are rewarding and worry-free like you deserve them to be.

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