Investor’s column: Four common regrets in retirement

Do you remember when you first heard the term “retirement?” You may have been too young to fully understand what it meant at the time, but by now it probably crosses your mind on a regular basis.

We spend a good majority of our lives working toward this major milestone – planning, worrying and dreaming. If you’re like more than half of Americans, you most likely are looking forward to your retirement years.

But what happens when you get to retirement and it’s not all it’s cracked up to be?

Have you considered the idea that you could regret your decision to retire?

Here are four common retirement regrets to keep in mind as you prepare for your golden years:

1. NOT CREATING A 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.

This decision can also have a significant effect on a spouse who may end up with your benefit as the larger of the two.

Claiming benefits as soon as possible at age 62 results in a 30 percent reduction in the monthly benefit amount. Waiting until age 70 boosts your benefit by 25 percent over the full retirement age amount.

If you don’t have a strategy in place for claiming your benefits, you could be leaving tens or hundreds of thousands of dollars on the table during your retirement years.

2. RETIRING TOO SOON

Whether you were forced to retire earlier than planned or you made the decision on your own, retiring before you are ready can cause plenty of regret. In fact, 30 percent of retirees admitted they would gladly re-enter the workforce if a job became available.

If you decide to retire early, you may find the cost of health insurance to be a burden until you reach age 65 and qualify for Medicare. Financially, the earlier you retire, the fewer years you have to save and the longer you will have to live off of your money.

Working even a few years longer can provide a big safety margin for income later in retirement.

3. OVERSPENDING EARLY RETIREMENT

Even if you have a solid nest egg saved to carry you through retirement, you still need to exercise financial discipline to ensure your money lasts. Dipping too deep into your savings as soon as you retire could make or break your retirement dreams.

Instead, create a realistic retirement budget, factoring in travel or hobbies, then work with your adviser to find a withdrawal rate that will stretch your money for as long as possible.

4. NOT PLANNING FOR YOUR FREE TIME

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.

But if you plan ahead to fill your time with fulfilling activities, you can avoid the negative emotions that can come with this life transition.

A BMO Bank study on retirement planning revealed that retirees who stayed busy and active, pursued independence and volunteered their time were satisfied with their life.

One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure.

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.

This story was originally published February 5, 2018 at 11:48 AM with the headline "Investor’s column: Four common regrets in retirement."