What mistakes you can avoid when planning your retirement

Mistakes to avoid when planning retirement

Posted on 12/5/12 10:39:00 AM

Americans who are a part of the baby boomer generation have mostly reached the age that many citizens start to think about retirement. Those who have been investing money in their basic savings accounts are in a much more stable place financially, but should aim to avoid making several costly mistakes that could prevent them from being comfortable during retirement years.

According to recent statistics, 10,000 baby boomers will turn 65 every day, which is a pattern that will continue for the next 19 years. With this considered, Americans who are in this generation should make sure they are properly planning for retirement before they approach this age.

One of the tips that financial experts suggests to Americans approaching retirement is to not be overly optimistic. Some Americans have been known to consider the amount they have saved up to be enough for retirement, but make some bad investments that take their savings down significantly.

Another mistake that many Americans approaching retirement make is taking social security too early. Current government regulations say that you can't receive full Social Security benefits until you've reached that age of 66 and two months for those who are born after 1955. According to Kevin Luss, founder and president of the Luss Group, Americans sometimes take out their benefits too early because they feel like the program won't be sufficiently funded in the future.

“The old paradigm that you retire at 59 is getting to be outdated,” Luss said to FOX Business. “People are living so long that if you retire at 65 you’ll have to live in retirement for 25 years or more.”

Americans are also encouraged to not underestimate the amount that they spend. Since most retirees aren't going to live a life just sitting in their home after they stop working, they need to include discretionary costs into their planning. Medical costs, housing and basic daily needs should also be figured into the equation.

Life expectancy has increased over time also, extending the average time that Americans are retired to 20 or 30 years, meaning they should have enough money saved up for a longer amount of time.