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The Top 10 Retirement Planning Mistakes

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It’s easy to make big mistakes when saving and planning for retirement — and financial advisors say they see a lot of them.

Recently, investment management firm Natixis surveyed 2,700 finance professionals in 16 countries and asked them to identify the biggest retirement planning mistakes investors are making today.

Here are the top mistakes these pros see. Avoiding these blunders will go a long way to building a secure retirement.

10. Being too aggressive in investments

cash
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Financial Professionals Who Cited This Retirement Planning Mistake: 21%

Proper investing requires walking a tightrope: A little risk is needed to get to the other side, but being too aggressive can send you falling to the floor below.

Some people want to score big fast. For most investors, this strategy does not end well.

9. Underestimating real estate costs

Elderly couple in front of a house
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Financial Professionals Who Cited This Retirement Planning Mistake: 23%

Quick quiz: What is your biggest retirement expense likely to be?

Many people think the answer is “health care costs”. But according to the US Bureau of Labor Statistics:

“Housing is the single largest expense in dollars and as a percentage of total household expenditures where the reference person is 55 years of age or older.”

Failing to consider the true magnitude of these costs is a major mistake made by too many retirees.

8. Over-reliance on public benefits

social security and money
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Financial Professionals Who Cited This Retirement Planning Mistake: 33%

Some people have the false impression that Social Security alone will save their retirement. But as the Social Security Administration itself says, the public benefits program “was never meant to be the only source of income for people in retirement.”

However, if you’re determined to lean heavily on this retirement benefit, check out “8 Tips for Retiring Comfortably on Social Security Alone.”

7. Not understanding sources of income

Older man shrugging his shoulders "I don't know" expression.
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Financial Professionals Who Cited This Retirement Planning Mistake: 35%

If you don’t know where your money is coming from, you’re going to have a hard time budgeting for a month, let alone an entire retirement.

So, be sure to educate yourself on sources of income that will support your golden years. Even better, stop by our Solutions Center and find a financial advisor who can help you build a better retirement plan.

6. Forgetting to factor in health care costs

Senior man with his doctor
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Financial Professionals Who Cited This Retirement Planning Mistake: 39%

There is a debate about the cost of health care in retirement. Fidelity says a couple who retired in 2022 can expect to spend more than $300,000 on medical expenses during their retirement. Others say that estimate is far too high.

However, there is no doubt that many retirees will have to dig deep into their wallets to pay for their health care at some point.

5. Setting Unrealistic Performance Expectations

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Financial Professionals Who Cited This Retirement Planning Mistake: 40%

When investing, it’s good to hope for the best. But expecting big returns with a sense of rock-solid certainty is a mistake.

The stock market has historically returned around 10% per year. But there is no guarantee that future returns will be as high. And too many people are betting on even bigger returns in hopes of overstuffing their nest egg.

4. Being too conservative in investments

Woman who is a cheapskate
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Financial Professionals Who Cited This Retirement Planning Mistake: 41%

The other side of taking too much risk is being far too cautious.

With any luck, your retirement will last at least a few decades. You’ll likely need to take some financial risk – usually in the form of equity investments – if your nest egg generates enough income to support you year after year.

3. Overstatement of investment income

senior man holding money
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Financial Professionals Who Cited This Retirement Planning Mistake: 42%

You might think that saving $1 million will put you on the path to a luxurious retirement. However, many financial advisers recommend only withdrawing 4% of your investments per year during retirement. Some suggest getting even less.

If you spend 4% of $1 million, that’s only $40,000 a year. Sure, you can live on $1 million in retirement, but only if you’re realistic about the lifestyle that kind of money actually offers.

2. Underestimating how long you will live

Retired couple on their porch
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Financial Professionals Who Cited This Retirement Planning Mistake: 46%

Retirees are living longer than ever. This means your nest egg needs to last longer, especially if you develop costly medical conditions – or have to pay to live in a nursing home or nursing home.

1. Underestimating the impact of inflation

Man looking at inflation
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Financial Professionals Who Cited This Retirement Planning Mistake: 49%

After several decades of low inflation, prices have suddenly increased over the past two years. Maybe inflation will come down over the next year. Or maybe we’re looking at many years of rising prices.

If inflation remains entrenched in the economy, the money you have saved for retirement will quickly lose its value. So, while no one knows for sure what will happen to prices in the coming years, it is a mistake to simply assume that everything will be fine.

If you’re looking for ways to keep rising prices in check, check out “10 Surefire Ways to Beat Inflation.”

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