Retirement is a well-developed plan for post-working life. But, as Mike Tyson once said, everyone has a plan until they get punched in the face.
Many Americans don’t have enough money to retire. Or even if they want to, they waited until the last moment to start thinking about it.
Unfortunately, even for those among us trying to do the right thing, life is unfair and full of uncertainties.
You could be sabotaging your retirement options right now and not be aware of it. Here are four ways how.
Supporting adult children and other relatives
Did you know that the large majority of people defaulting on student loan debt are people age 50 or older? Over $331 billion of the annual student loan debt burden is carried by middle-aged and elderly people.
And most of these student loan debt defaulters are taking out student loans to pay for the education of their children and grandchildren.
Over 25% of American adults aged between 25 and 34 are living at home with their aging parents. This is an entire generation of adults still being supported by their adult parents.
If you are approaching retirement age, you should not be supporting adult children. The mark of a successful parent is having independent and self-sufficient children. And ask yourself, who will bail you out if you become bankrupt or exhaust your retirement fund?
Not working for as long as possible
A retirement fund is basically a bank account for a post-working life. The average person retires at the age of 63. Still, the typical human life span is 70 to 74. So, a retirement account or fund may need to last you a decade or longer.
You could potentially live to age 80 or 90, or even longer. And while there is nothing wrong with that, you could potentially outlive your own retirement. And there would be nothing sadder than being in advanced age and having to consider working again.
Your retirement must be lived on your own terms and schedule. Just because you turn 63 does not automatically mean you should retire, barring any forced retirement
Work for as long as possible to save more money, budget, and keep all of your options open. Retiring at 63 because everyone else is may not be the best option for you.
Being unaware of lifestyle inflation
If you have been paying attention to any financial news in recent months, then you understand that inflation is at its highest levels in decades.
The point is that due to inflation, it will take even more money to maintain the same exact lifestyle. And this could be true even if you are budgeting.
If you need $40,000 to pay your annual retirement expenses, then a 7% inflation rate could mean that you would need to spend $42,800 the next year. And those costs will keep increasing.
You could significantly reduce your retirement savings, or exhaust them based on your lifestyle, without even realizing it.
Keep to a budget and watch your spending.
Not considering downsizing
There are many ways in which you can financially downsize your life.
You could sell your house and move into an apartment. You could sell your car and get a smaller car. Or you could refrain from buying brand-name goods and only start buying generic products to save money.
You could leave the United States and move to a preferred developing country with weaker currencies against the dollar and enjoy a lower cost of living. Your retirement fund could last multiple decades in a developing country.
Consider how strategically downsizing your life and finances could bolster your retirement fund.
