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The Top 4 Regrets in Retirement

The Top 4 Regrets in Retirement

| September 16, 2021
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What do you want to feel when you retire? A general sense of fulfillment from all your hard work? Excitement about finally reaching this pivotal milestone? Regret? That last one may not make your list, but unfortunately, 46% of retirees say they have experienced financial regret. (1)

Thankfully, you have the chance to learn from the mistakes of others and avoid these retirement regrets so your golden years are everything you dream of! 

1. Retiring Too Early (or Too Late)

Whether you are forced to retire earlier than planned or you decide on your own, retiring before you are ready can cause plenty of regret. In fact, over 30% of retirees go back to work in some way, shape, or form after they cross the retirement finish line. (2) For some, they wanted to earn more money; for others, they wanted to keep using their skills.

Working even a few years longer can provide these valuable benefits: 

  • More time to accumulate savings
  • More years to apply toward Social Security, which could result in a larger benefit amount
  • Health insurance coverage through your employer
  • Purpose and identity
  • Possible stronger mental (3) and physical health (4)

On the other hand, another common regret is waiting too long to retire. If you have enough money saved and you and your financial advisor have planned for every aspect of your golden years, you should consider retiring as soon as possible. The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it. The point is this: your situation is unique. Be sure to take a good hard look at your financial situation to ensure your money will last, and don’t let your retirement fears hold you back.  

2. Not Creating a Personalized Social Security Claiming Strategy

Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you choose to collect these benefits will impact the amount of benefit you receive. And even though you likely have more than enough money to get you through retirement, Social Security is a benefit you are entitled to. The money you receive from Social Security can be used to invest or give to charity if you don’t need it to cover expenses. 

Full retirement age (FRA) changes based on the year you were born. For those born in 1937 and earlier, FRA is 65. After 1937, two months is added each year until FRA becomes 66 for those born between 1943 and 1954. Starting in 1955, two months a year is added again until the FRA becomes 67 for those born in 1960 or later. 

If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive your full Primary Insurance Amount, which is the full benefit that you have earned, but if you choose or (are forced into) an early retirement, you will receive a reduced benefit. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age, up to 30%.

3. Underestimating Risk

You might think that if you just save as much as possible, you’ll be fine. But there are a handful of factors that could devastate your hard-earned nest egg, like inflation, what the markets are doing when you retire, how long you live, or unexpected healthcare expenses. You might not be able to plan for every contingency out there, but you can stress-test your finances to see how they will hold up to any or all of these risks, then map out a strategy for how to manage risk and preserve your money. 

4. Not Setting Retirement Goals

Free time is a major perk of retirement, but when you go from working full-time to not working at all, it can be a shock to your system. Saying goodbye to your career, your colleagues, and your routines can cause anxiety and depression. But if you plan ahead to fill your time with activities that will fulfill you, you can avoid the negative emotions that can come with this life transition. 

Do you want to know what activities result in a fulfilling retirement? A BMO study on retirement planning reveals that retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life. (5) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (6) The takeaway here is to be intentional about your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality. It’s easy to lose your identity when you say goodbye to your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.

Retire With No Regrets

No matter what your situation, it’s possible to enjoy your retirement without regretting the decisions you made. At Colorado West Investments, we understand that deciding when and how to retire is a difficult decision, but we want you to know that you don’t have to make the hard choices on your own. Our top priority is to help you live the retirement of your dreams. Call 970-249-9882 or email michael@wealthwithapurpose.com to get started today!

About Michael

Michael Murphy is an associate wealth advisor at Colorado West Investments Inc., a wealth management firm committed to providing exceptional, comprehensive financial services to highnet-worth individuals, business owners, and retirees. Michael is known for building strong relationships with his clients, helping them clarify their goals and values, and partnering with them to design a financial road map that will help them work toward their ideal life. He is passionate about walking his clients through the financial planning process and seeing the confidence and relief on his clients’ faces as a result. Michael has a bachelor’s degree in finance from the University of Northern Colorado and an MBA from the University of Colorado Denver. When he’s not in the office, you can find him outside, likely hiking or mountain biking, or digging into a book. Michael and his wife, Becca, have 6 dogs at home. Becca runs a dog training and boarding facility. To learn more about Michael, connect with him on LinkedIn. 

*Advisors associated with Colorado West Investments, Inc. may be either (1) registered representatives with, and securities offered through LPL Financial, MemberFINRA/SIPC, and investment advisor representatives of Colorado West Investments, Inc. or (2) solely investment advisor representatives of Colorado West Investments Inc., and not affiliated with LPL Financial. Investment advice offered through Colorado West Investments Inc., a registered investment advisor and separate entity from LPL Financial.  

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

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(1) https://www.coventrydirect.com/blog/retirement-regrets/

(2) https://www.newretirement.com/retirement/reverse-retirement-find-out-why-retirees-are-going-back-to-work/

(3) https://cdn.theconversation.com/static_files/files/1229/Nikolov-cognitive-decline.pdf?1600106282

(4) https://www.health.harvard.edu/staying-healthy/working-later-in-life-can-pay-off-in-more-than-just-income

(5) https://commercial.bmoharris.com/media/filer_public/94/9e/949ec108-a05c-453e-b6d6-f22b52ed817e/appmediahero_imagebmo_wealth_institute_retirement_game_plan_march_2016.pdf

(6) http://psycnet.apa.org/journals/pag/28/2/578/?_ga=1.177767717.1281536077.1488342343

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