3 Ways to Avoid Regrets in Retirement

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Everyone has regrets at some point in their life, but one of the worst feelings is nearing the end of your life and wishing you’d done things differently.

Approximately 55% of retirees have financial regrets, according to a survey from Global Atlantic Financial Group, and the most common regret was not saving enough for retirement.

The good news is that there are a few steps you can take right now to avoid regrets in retirement. They’re simpler than you may think, and a little extra preparation now can help you start your senior years off on the right foot.

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1. Make sure you won’t be over-relying on Social Security benefits

Roughly 1 in 5 married couples and close to half of unmarried retirees depend on their Social Security checks for at least 90% of their retirement income, according to the Social Security Administration. However, those monthly checks are only designed to cover around 40% of your pre-retirement income, meaning that if you expect your benefits to cover the majority of your expenses, you may end up making some serious financial sacrifices.

Long before you retire, it’s important to think about how much of your retirement income will come from your savings versus Social Security benefits. To figure that out, the best place to start is checking your expected benefit amount online. By creating a mySocialSecurity account, you can see what your estimated future benefit amount looks like based on your real earnings. That will give you an idea of how far your monthly checks will go in retirement.

From there, you can determine how much of your retirement income will need to come from your savings. For instance, if you expect to spend, say, $50,000 per year in retirement and you’ll be receiving around $20,000 per year from Social Security, that means you’ll need to be able to pull the other $30,000 per year from your retirement fund — assuming you don’t have any other sources of income.

2. Account for healthcare and long-term care costs in your retirement plan

When you’re estimating your future costs in retirement, it’s easy to focus only on your day-to-day living expenses and a few bigger costs like travel or new hobbies. Not many people want to think about the not-so-fun expenses — like healthcare and long-term care — but failing to consider these costs could result in big problems down the road.

The average retiree spends around $4,300 per year on out-of-pocket healthcare expenses, according to a study from the Center for Retirement Research at Boston College. Even if you’re enrolled in Medicare, you’ll still face some out-of-pocket costs like premiums, deductibles, copays, and coinsurance.

Additionally, under Original Medicare (or Parts A and B), you won’t receive coverage for dental, vision, or prescription drugs. If you choose to buy additional coverage through a Part D plan or Medicare Advantage plan, that’s an additional cost.

Long-term care is another major expense that around 70% of retirees will face at some point, according to the U.S. Department of Health and Human Services. The average semi-private room in a nursing home will cost you around $6,800 per month, and since long-term care isn’t covered by Medicare, you may end up having to foot the bill yourself.

It can be tough to plan for healthcare and long-term care before you retire, because it’s impossible to predict exactly how much care you’ll need and what it will cost. But try to budget at least some money toward these expenses so you’re not blindsided later in life.

Do some research on your health insurance options to figure out whether you want to enroll in Original Medicare or a Medicare Advantage plan, and also consider whether long-term care insurance is a good option for you. By budgeting some of these costs into your retirement plan, you can better protect yourself financially.

3. Don’t underestimate how long you’ll live in retirement

Even if you’ve meticulously planned for retirement and have built a strong and sturdy nest egg, underestimating your life expectancy can undo all your hard work.

Americans are living longer, meaning you may spend more years in retirement than you think. A third of today’s 65-year-olds are expected to live past age 90, according to the Social Security Administration, and an estimated 1 in 7 will live to age 95 or beyond. If you retire in your early 60s, that could mean spending roughly a third of your life in retirement.

If you underestimate your life expectancy, there’s a chance your retirement fund will run dry too soon. Even if you only live a few years longer than you anticipated, that can potentially amount to tens or hundreds of thousands of dollars in living expenses that you haven’t prepared for.

Although you can’t predict exactly how long you’ll live, take an honest look at your overall health and family history to estimate your life expectancy the best you can.

Retirement should be a joyous time in your life, not a period filled with regrets. Fortunately, the more thought you put into your retirement plan, the better chance you have of enjoying your later years to the fullest.

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