Top 10 Retirement Planning Mistakes

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Anatoly Karlyuk /

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

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

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Following are the top errors seen by these professionals. Avoiding these blunders will go a long way towards building a secure retirement.

10. Being too aggressive in investing

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Financial professionals who cited this retirement planning mistake: 21%

To invest properly, you must work hard: going the other way requires a little risk, but being too aggressive can land you on the bottom floor.

Some people want to score big fast. For most investors, that strategy doesn’t end well.

9. Underestimating the cost of real estate
old couple in front of houseMonkey Business Images / Shutterstock

Financial professionals who cited this retirement planning mistake: 23%

Quick Quiz: What’s Likely to Be Your Biggest Expense in Retirement?

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

“Housing is the largest expense in dollar amounts and as part of the total expenditure for families with a reference person age 55 and older.”

Taking into account the actual scope of these costs is a big mistake that many retirees make.

8. Relying too heavily on public benefits
social security and moneyJJ Gouin /

Financial professionals who cited this retirement planning mistake: 33%

Some people are under the misconception that Social Security alone will save their retirement. But as the Social Security Administration itself states, the public benefit program “wasn’t the only source of income for people when they retired.”

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

7. Failure to understand the sources of income
old man shrugs shoulders "I don't know" ExpressionPathDoc /

Financial professionals who cited this retirement planning mistake: 35%

If you don’t know where your money is coming from, it will be difficult to budget for a month, let alone a full retirement.

So, make sure to educate yourself about the sources of income that will support your golden years. Even better, stop by our solution center and find a financial advisor who can help you design a better retirement plan.

6. Forgetting to Factor in Health Care Costs
senior man with his doctorRob Marmion /

Financial professionals who cited this retirement planning mistake: 39%

There is some debate about how much health care will cost you in retirement. Fidelity says a couple who retire in 2022 can expect to spend more than $300,000 on medical expenses at their retirement. Others say the estimate is too high.

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

5. Setting Unrealistic Return Expectations

The Financial Professionals Who Cited This Retirement Planning Mistake: 40%

When you invest, it’s okay to expect the best. But expecting great returns with a sense of rock-solid certainty is a mistake.

The stock market has historically returned to the ballpark of 10% annually. But there is no guarantee that the returns will be so high in the future. And many people bank on even bigger returns in hopes of supersized their nest egg.

4. Being too conservative in investments
woman who is a cheapskateFranz Pfluegl /

Financial professionals who cited this retirement planning mistake: 41%

The flip side of taking too much risk is being too cautious.

With any luck, your retirement will last at least a few decades. You’ll need to take some financial risk — usually in the form of investing in stocks — if your nest egg is going to generate enough income to meet your needs from year to year.

3. Underestimating investment income
senior money holderprostock-studio/shutterstock

Financial professionals who cited this retirement planning mistake: 42%

You might think that saving $1 million will get you on your way to a great retirement. However, many financial advisors recommend withdrawing just 4% of your investments annually during retirement. Some suggest withdrawing even less.

If you spend 4% of $1 million, that’s only $40,000 a year. Sure, you can live off $1 million in retirement—but only if you’re realistic about the lifestyle that type of money really provides.

2. Underestimating how long you’ll live
retired couple on their porchRocketclips, Inc. /

Financial professionals who cited this retirement planning mistake: 46%

Retirees are living longer than ever before. That means your nest egg has to last in the long run, especially if you develop costly medical conditions — or have to pay for senior living or living in a nursing home.

1. Underestimating the effect of inflation
man watching inflationkarpova/

Financial professionals who cited this retirement planning mistake: 49%

After several decades of low inflation, the past few years have seen a sudden jump in prices. Maybe in the next one year inflation will come down. Or maybe we’ve been seeing rising prices for several years.

If inflation remains embedded in the economy, the value of the money you save for retirement will quickly decrease. So, although no one knows for sure what will happen to prices in the coming years, it is a mistake to assume that all will be well.

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

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