Top 6 Retirement Mistakes To Avoid
Estimated reading time: 11 minutes
Do not let retirement mistakes compromise your future. Understand the implications of divorce on your retirement finances.
6 Retirement Mistakes Throwing Off Your Plan
We all hope that by carefully planning for retirement, we will not have to worry about anything in the future.
While making a plan does make you more comfortable and prepared, there are still ways that cause your retirement plan to derail.
Besides the obvious retirement income sources, let’s explore the overlooked potential pitfalls.
Getting Divorced – Relationship Mistake 1
No one plans on getting a divorce, but life happens.
Divorce can have a lasting impact on your finances and, subsequently, your quality of life.
Even if divorce is amicable, legal fees can quickly spiral out of control when dividing the family assets.
You probably saved money and made a retirement plan based on the assumption that two people will enjoy the family nest egg in the golden years.
However, in divorce, the savings will be divided among two households, which means you have less money.
Marriage and common-law partnerships need to be looked after, and time needs to be spent nurturing the relationship and caring for each other.
Since, at the end of the day, it is both a romantic and a business relationship.
This is one of many retirement mistakes you want to avoid!
2. Using A Home As Retirement Savings
Having a house seems like a surefire way to make sure you have a way to finance your retirement.
In theory, this seems like a great idea, but real life can be very different.
Once you are accustomed to a particular lifestyle, downsizing, and downgrading can be almost impossible.
Plus, there are always costs that we usually consider when considering our homes as assets, such as legal and real estate agent fees, land transfer tax, and moving fees.
Also, there is always the emotional connection we tend to have with our homes.
Sometimes, it is a very taxing and difficult decision to sell.
Planning around retirement mistakes such as this is easy by ensuring you look at the complete picture.
Always remember the extra costs you will incur when and if you get around to selling your home.
3. Reliance On Working After Retirement
Confining oneself to continue working in the golden years is less of a retirement mistake and more of an attitude issue.
Retirement is supposed to be the golden years you get to enjoy in return for a life of hard work.
Working in retirement should be the last resort, not the primary plan.
If you plan correctly and save early, working in retirement should only be an option to keep yourself occupied and not a necessity.
There are also other issues, such as health, to consider when thinking of working in retirement.
No one knows what the future holds, but anything is possible.
Plan now so you don’t have to rely on working in your retirement.
4. Believing Grown Children Won’t Need Support
You might not want to, but the fact is that a majority of parents end up supporting their adult children late into life.
It’s unfortunate but there will be times when your adult children might lean on you financially.
This support might include guaranteeing loans, providing cash for home purchase down payments, wedding/divorce costs, or for grandchildren’s education bills.
All things need to be accounted for in your retirement plan.
It is best to have an open and honest conversation with your children about what you can and can’t do and then stick to your guns.
5. Short-Changing Life Expectancy
A study by the Society of Actuaries reported a 58% chance that one or both family members could live to age 90.
Retirement can last 25 years or until you’re gone from this earth.
This is something that has to be taken into account when planning for retirement.
Running out of money is a great fear that many Canadians have, and the best way to manage that risk is to ensure that your retirement plan accounts for long life expectancies.
Speaking to your financial planner and reviewing how your savings will fund your retirement lifestyle is best.
Also, consider your options to ensure you don’t run out of money 10 years into retirement.
6. Expecting Money From Parents
There will be close to a trillion dollars being transferred between baby boomers and their kids in the coming decade.
Although this seems like a huge number, considering the average inheritance size ($56,000) starts to paint a clearer picture.
As a retirement plan, banking on an inheritance (generational wealth) is irresponsible and dangerous.
Life expectancies have increased dramatically in the past few decades, and the boomers will likely use all the money currently saved to fund their now-longer retirements.
The only way to avoid falling into the inheritance trap is to make sure you have a solid retirement plan and a financial advisor that you can trust.
This plan must be tweaked to reflect your changing needs and wants.
Discussion Question: Do you find yourself relying on any of the above retirement mistakes? What is your next step?
Behind Closed Doors
Hey friends,
Shorts, winter jacket, boots, rain boots, hat, scarf, t-shirt… what is the weather like today, honey?
That’s my question these days with the weather warming up and then snowing with a mix of rain.
I’m back to working more hours again (don’t ask), but thankfully, only for about 8 weeks, then I’m down for the summer months.
With so much going on with holiday planning and stuff to renovate around the house, I need to be home for my family.
Our little guy still has a runny nose, so this week, we kept him home from a trip to the grocery store and one playdate with his buddies.
We try to get him out of the house as much as possible, and with Spring trying to break through, he’ll see more of the outdoors in the coming weeks.
That’s an exciting week, how was yours?
Mr.CBB
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Hi Mr.CBB and Fans,
Here’s a special brag that I’d like to share with everyone today.
I purchased a Hamilton Beach juicer in brand-new condition from Value Village for $7.99.
It still had the plastic shipping tape and covering but had no manual.
It is a Proctor-Silex 2 speed, so I went online to find a manual and found it was recalled.
I emailed them to see if I could get a replacement part and manual from them, and they said no.
I was told to cut the cord and email them a pic of the machine with the cord cut.
Then, in the mail yesterday for Valentine’s, I received a brand new juicer at no cost.
Now, that is excellent customer service.
CBB Finance Tip
Just because you want a million-dollar portfolio for your retirement years, someone else may only need a small portion to feel financially free.
You might fully pay your mortgage and feel free from financial worry, whereas someone else feels free just from paying off consumer debt.
We all react differently to money which means there is no wrong or right answer to wiping away financial stress, only you can do that.
Top Finance Post
This week I ventured over to the blog, Money Prodigy where I read an interesting article about how the Amish manage their kids paycheques.
The Amish are very aware that handing over an entire paycheck to a 13-14 year old child would be stupid.
They’ve essentially had to come up with, then hone, a foolproof way to deal with their child’s paycheck from an early age.
There is no allowance given to Amish children.
At what age did you start earning money, and how was it managed?
Frugal Recipe
Food is a big part of any budget and a struggle for so many people, so I’ve created frugal recipes for my family and yours for many years.
I have a second Facebook page called The Free Recipe Depot, where I exclusively share recipes from Food Bloggers worldwide.
Check out the Free Recipe Index on CBB, which is compiled of frugal recipes that are 100% tested and accepted by family and friends!
Mrs. CBB and I were going to work on some lemon squares this weekend for Easter until I noticed this recipe on Pinterest from Sarah over at The Sugar Apron.
How cool are these Flower-Shaped Mini Lemon Tarts?
I will try an almond flour shortbread base and sugar-free lemon curd or pie filling.
In the meantime, this recipe is super easy to make from the sounds of it and would be perfect for Easter or any Spring outdoor garden parties.
Do It Yourself
Why pay for ripped jeans to follow the latest trends when you can do it cheaply at home?
Enjoy this great little tutorial on distressing your jeans at home.
Search Term Giggles
Always begin and end your day with a SMILE!- Mr.CBB
Every week, I get tens of thousands of people visiting Canadian Budget Binder because they did an online search and found my blog.
Most times funny, Sometimes serious.
- Can you Clam U-File Tax Software?– Clam if you wanna clam!
- I do everything in the house. How do I teach my husband a lesson?– Haha, this was scary and funny at the same time.
- How much to budget for interior design?– Skip it and save your money. Stock up on vintage pieces and second-hand deals, and your house will look smashing. Pay yourself first.
- Budget position when there isn’t enough cash– A Screwed position comes to mind. All joking aside, you must downsize your categories or expenses. Perhaps earning more money with a second job or hobby with an income may help.
ThThat’sll the fun for this week, thanks for dropping by and wewe’llee you all again next Saturday.
Mr.CBB
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