Most of us have things in life we regret, whether it was the perm we got during high school or the college major that didn't end up doing us much good. But while it's one thing to make mistakes early in life, it's another thing to fall victim to major blunders in the course of retirement planning.
In a recent MassMutual survey, current retirees were quick to highlight certain regrets they have. Here are three to be aware of -- and ideally avoid.
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1. Not increasing savings
Many current retirees wish they'd boosted their savings before wrapping up their careers. And if your nest egg could use a lift, you may want to make that a priority in the years leading up to your workforce exit.
Social Security is only designed to replace about 40% of your pre-retirement earnings. So the more savings you bring with you into retirement, the easier it's apt to be to cover your essential expenses and have money left over for the activities that could make your senior years a lot more fun.
Remember that Social Security benefits may be subject to cuts down the line. So it's best to arm yourself with adequate savings in light of that.
In the years leading up to retirement, take advantage of catch-up contributions in your 401(k) or IRA. While this is a smart thing to do at any age, if you're entitled to a 401(k) match, make sure to contribute enough to your employer's plan to snag it in full.
2. Not prioritizing good health
Many current retirees regret not taking better care of their health in the years leading up to retirement. If you let your health fall by the wayside, aside from physical repercussions, you might also suffer financial consequences.
Entering retirement in poor health could lead to very costly medical bills as soon as you enroll in Medicare. As it is, Fidelity says that the typical 65-year-old person retiring in 2023 is looking at spending $157,500 on healthcare throughout retirement. Neglecting your health ahead of your senior years could add to that sum.
In the years leading up to retirement, make sure you get an annual physical and follow-up on issues as per your doctor's recommendations. It's also a good time to adopt exercise and dietary habits that are conducive to good health.
3. Not reducing expenses
Even if you manage to bring a decent amount of savings with you into retirement, you may end up needing to cut your spending because there'll be less income at your disposal than during your working years. Therefore, it pays to try to reduce your expenses ahead of retirement so you're used to doing so once your career ends.
Many current retirees regret not reducing their expenses sooner. And the truth is that cutting back on certain expenses at the tail end of your career could make it easier to give your nest egg a late-in-the-game boost. Think about the bills you're currently covering that you may be able to cut with relative ease. You may find that dining out once a week rather than twice does a lot of good for your finances.
It's pretty difficult to go through life without any regrets at all. But these three, in particular, have the potential to hurt your retirement. Now that they're on your radar, you can hopefully take steps to avoid them.
