Money woes can be one of the biggest impediments to a comfortable retirement for seniors. And, while no one sets out to run out of money, the medical expenses, mortgages and long-term care costs can quickly add up, draining even a careful retiree's nest egg dry.
The 2010 Wells Fargo Retirement Fitness Survey found that 27% of people are concerned about their financial situation when it comes to retirement. Nothing can guarantee that you will have enough money to cover all your costs in retirement, but there are a few common mistakes that you can avoid to help protect your assets.
According to Julia Valentine, author of "Joy Compass: How to Make Your Retirement the Treasure of Your Life," retirees often make similar blunders when it comes to financial planning. Here are the most common mistakes she sees:
- Replacing financial advisors with family members. Unless you have a niece who is an accountant, or a grandson who majored in retirement finance, you should seek outside professional help when it comes to managing your money. There's nothing wrong with letting your loved ones know that their advice is appreciated, but make sure you double-check their suggestions with a trained financial expert.
- Having an inadequate long and short-term plan. According to the Wells Fargo survey, only one-third of Americans has developed a financial plan to see them through retirement. Lacking a plan could affect the future health of your finances in several ways. First, lacking a healthy perspective of inflation and how it may affect your future purchasing power can leave you with too little money for future care. You need to make sure that your investments, social security income, etc., more than keep pace with inflation. Second, without a plan for the future, you may also find yourself in a situation where you spend too much of your nest egg too soon. Third, having concrete financial plans will enable you to take advantage of any investment opportunities that may come along.
- Turning a blind eye to the possibility of scams. Valentine says that statistics show 1 in 5 Americans older than 65 have been preyed upon by con men. These scammers are constantly coming up with new ways to cheat the people they feel are most vulnerable. The elderly always top the list of a swindler's potential victims. Retirees can avoid being ripped-off by remaining aware of the most common forms of con.
- Keeping a portfolio stagnant. It's important to update your portfolio in response to significant changes in health, lifestyle, and future plans. It's near-impossible to predict if or when your or a loved one may need to pay for long-term care or significant medical expenses, but it's helpful to keep a realistic perspective on these things and adjust the risk and projected return of your portfolio accordingly.