While retirement is very much a new beginning rather than an end point, it is important to plan carefully, particularly when it comes to financial issues. While outgoings tend to be lower in your golden years, you want to be able to afford to sail on a Greek cruise, eat at gourmet restaurants, or treat yourself in whatever manner you see fit. As a result, maintaining a steady income stream is important, even if you are no longer working.

Financial planning for retirement is crucial, but there are plenty of speedbumps and pitfalls that retirees can fall into, which may jeopardize their ability to live the lifestyle they want to. By identifying where things can go wrong, it is much simpler to mitigate or avoid issues altogether. 

So whether you plan to stay close to family, travel around the world, or experience a new life by gaining dual citizenship in Panama or another popular retirement country for expats, here are some of the common pitfalls to watch out for, and how to dodge them. 

Underestimating Longevity

It might sound a little morbid, but when planning for retirement many older people underestimate how long they will live, meaning that their savings run out sooner than required! It is important to always plan for longer than you think, due to increased life expectancy and improvement in healthcare. If you end up with a little extra every year you can treat yourself to something special, or leave your family more than they expected. 

Not Diversifying Income Sources

When planning for retirement, relying on one income source is a bad idea. If your only source of income is Social Security or a pension, you are at the mercy of economic changes or policy shifts, and things can very easily go wrong. As a result, your retirement portfolio should be diverse, including a mix of benefits, pensions, investments, and even rental income from property or income from part-time work. This means you are always protected against financial uncertainty or change. 

Ignoring Inflation and Rising Costs

When planning for life after retirement it is important to think about how the economy will be in the future rather than basing everything on how it is now. Inflation can erode the purchasing power of your cash as time goes buy, meaning savings and investments can be worth less in real terms by the time you come to use them. So when assessing your needs, include inflation, and invest in assets that will grow faster than inflation to avoid the impact of rising costs. 

Overlooking Healthcare Costs

Healthcare costs can be some of the most onerous for retirees and can put a significant strain on your finances if not considered carefully. As retirees age they naturally require more frequent medical care, and overlooking healthcare costs is a common pitfall when it comes to financial planning for retirement. When putting together your plan, make sure you budget for healthcare costs and consider options such as HSAs or Medicare Advantage plans which can help managing these expenses more efficient. 

Failing to Plan for Taxes

Tax is a fact of life even after retirement, and failing to consider the tax implications on retirement income can lead to significant unexpected costs. Take care to research all your potential obligations and think about consulting a tax advisor to ensure you are in the best position for your retirement. 

By making yourself aware of the common financial mistakes and issues that face retirees you can take appropriate action to mitigate and avoid them. Professional guidance is always worthwhile, and makes for a more streamlined and easy-to-manage retirement.