5 Deadly Money Mistakes to Fix in Your Pre-Retirement Countdown

Retirement Planning: 5 Mistakes to Avoid in the Next 5 Years

Are you nearing retirement age and want to ensure a comfortable and financially secure post-work life? As a financial planner, I've seen many individuals make costly mistakes that can put their retirement plans at risk. In this article, we'll explore five common pitfalls to avoid in the next five years before you retire.

1. Not Reviewing Your Retirement Goals

Before we dive into specific mistakes, it's essential to assess your retirement goals and ensure they're aligned with your current financial situation. Ask yourself:

• What do I want to achieve in my retirement?


• How much income will I need to maintain my desired lifestyle?


• Have I considered inflation, healthcare costs, and other expenses?

TogetherBudget can help you create a comprehensive budget that accounts for your retirement goals and expenses. By tracking your income and expenses, you'll have a clear picture of where you stand financially and can make informed decisions to stay on track.

2. Failing to Max Out Retirement Accounts

Maximizing contributions to tax-advantaged retirement accounts, such as 401(k) or IRA, is crucial in the next five years before retirement. Consider:

• Contributing at least 10% to 15% of your income towards retirement accounts


• Catch-up contributions if you're 50 or older


• Utilize catch-up contributions for a total annual contribution limit of $26,000 (2022)

3. Ignoring Inflation's Impact on Retirement Savings

Inflation can erode the purchasing power of your savings over time. To combat this:

• Invest in assets with historically high returns to keep pace with inflation


• Consider laddering bond portfolios or investing in Treasury Inflation-Protected Securities (TIPS)


• Review and adjust your retirement income projections regularly

4. Not Considering Healthcare Costs

Healthcare expenses can be a significant burden in retirement. Plan ahead by:

• Building an emergency fund to cover unexpected medical costs


• Investing in a Medicare supplement plan or Medigap policy if needed


• Researching affordable healthcare options, such as Medicare Advantage plans

5. Failing to Develop a Post-Retirement Income Strategy

Your retirement income strategy should account for various sources of income, including:

• Social Security benefits


• Pensions or annuities


• Dividend-paying stocks or bonds


• Part-time work or consulting

By considering these factors and developing a comprehensive post-retirement income plan, you can ensure a stable financial foundation in your golden years.

In conclusion, avoiding common mistakes in the next five years before retirement requires careful planning, attention to detail, and a clear understanding of your financial goals. By using tools like TogetherBudget to track expenses, create budgets, and plan for the future, you'll be well-prepared to achieve a secure and fulfilling retirement.

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By Malik Abualzait