There are so many different ways to screw up your retirement.
You could save too little, too much (it can be a problem, I promise), or not at the right time.
Ensuring you have money once you’ve stopped working is one of the most stressful things to save for.
You need someone in your corner that’s going to boost your nest egg, not jeopardize it.
Let me tell you about the red flags that can sabotage your retirement if you don’t take them seriously.
There are quite a few things that can throw a wrench into your retirement plans.
You may not have all the answers about when, how, or why to retire right now.
That’s okay, but you need to get them nailed down before it’s too late.
One of the most difficult choices to make is when to retire.
You can have a ballpark of how old you want to be, how much money you want to have saved, etc., but it won’t matter if you’re not completely financially and mentally ready to take the leap.
That’s why I’ve compiled 6 red flags that you should be concerned with when you’re deciding to retire.
If any of these apply to you, you should reconsider when you choose to retire to ensure your assets, happiness, and affairs are in order.
Should you trigger one of these warnings, take a step back and reevaluate. You might just save yourself from sabotaging your retirement if you do.
Here are the red flags that you’re not ready to retire:
1. Struggling with current bills.
If you can’t pay your bills on your current salary, there’s no chance you’ll be able to afford them once you lose that paycheck.
Look into options like refinancing to reduce your obligatory payments if money is tight.
Retiring while you’re unable to pay your current bills will almost assuredly guarantee you won’t have enough money saved.
2. Unmanageable debt levels.
Having a ton of debt isn’t a good thing anyway, but having debt (and debt payments) while trying to retire is a recipe for disaster.
While saving, try to reduce if not eliminate how much you owe.
If the choice comes down to putting money into your retirement account or paying down debt, you have to do what’s right for you, but remember how severely you’ll strain your savings if that debt follows you into retirement.
3. Lack of planning for future expenses.
Health Savings Accounts (HSAs) are a common recommendation for pre-retirees. Like an investment retirement account (IRA), the funds you deposit grow and are dedicated to health expenses.
Once you retire, a large unexpected expense could decimate a could portion of your savings.
Take measures to ensure you have a plan for major expenses.
4. Unknown Social Security benefits.
Social Security shouldn’t be your sole income, but you should take advantage of it while you have it.
If you haven’t estimated how much you’ll receive, before you retire is a good time to do so.
You can factor in those payments to plan for unexpected expenses like I mentioned earlier, and you can ensure the proposed benefit is accurate.
5. Not accounting for inflation.
Unless you’re a financial professional, you probably don’t spend much time thinking about inflation.
But, it’s an important metric to take into account when calculating how far your dollars will go in the years to come.
At an inflation rate of 3% (which is average), your expenses will double in less than 25 years.
Are you prepared to cover the difference?
6. Loving your job.
Lastly, if you’re still working and dreading retiring because you’ll miss your job, don’t leave.
One of the most common causes of discontent in retirement is boredom.
If you still feel passionate about how you make a living, and would relish the chance to continue working, the paychecks are just a side effect.
Retirement should be a peaceful, relaxing part of your life, and keeping an eye out for these red flags in the years leading up to it will go a long way in making sure it stays that way.