Four Common Retirement “Pitfalls” You Need to Look Out For
- Putting off retirement planning.
It’s always too late to wait, but it’s never too early to start. The earlier you enroll in a supplemental retirement plan and start saving, the longer you’ll allow compound interest to work in your favor. Waiting too long means you’ll have to divert more income later to catch up. Although how much to save to supplement your STRS Ohio pension is not a one size fits all, the necessity to save is certain. Your life circumstances, as well as short-term and long-term goals, play a key role in determining the right amount of additional savings you will need.
- Assuming your expenses will decrease in retirement.
Your house may be paid off and you will no longer have to cover the costs of commuting or maintaining your classroom, but in retirement you’ll spend more on health care and will likely be spending more in other areas such as leisure activities and hobbies. Today’s retirees can expect to live longer too, making financial planning (including estimating retirement expenses) even more important.
- Not planning enough activities in retirement.
For several years your schedule has likely revolved around work. After retirement, suddenly there’s no alarm clock, no meetings and time on your hands. This abrupt change can be a bit disorienting for many new retirees. Beyond financial preparation for retirement, take some time to think about how you will fill your time in ways that are meaningful and enjoyable to you. What projects and activities are you interested in exploring?
- Trying to figure it out on your own.
You may be good at saving, but it still pays to seek professional advice to make sure your retirement planning is on the right track. A periodic evaluation of your personal finances — including assets, liabilities, insurance and investments — with a credible financial advisor can help maximize the return on your money. Also take advantage of STRS Ohio’s free retirement planning webinars targeted to every stage of your career. Finally, be sure to schedule an appointment with an STRS Ohio benefits counselor to review important information leading up to your retirement date.