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Everyone makes financial mistakes in their life, but after retirement, the effects of those bad decisions could have bigger repercussions than they would for a younger person. Some elements of retirement, like Social Security, present the opportunity to make all new financial mistakes. If you’re in or nearing retirement, here are three common misjudgments you should try to avoid.
Drawing on Social Security Too Early
Though seniors become eligible for Social Security at age 62, if they begin to draw those benefits right away, they might lose out on around 33% of their total possible benefits. If you’re able to work to your full retirement age of 66, even then, you’ll still get 35% less than you would if you waited to draw on the benefits until they cap out when you reach 70. If investments, savings, or continuing to work can keep you paying your bills comfortably until 70, try to wait to draw on Social Security in order to grow your overall benefits. Every year you wait adds to the benefits you will ultimately receive.
Keeping Risky Investments
Once you’re in retirement, it would be nice for your savings to keep growing as they did while you were working, but at the same time, you now depend on that nest egg for your livelihood. While your financial advisor might help you devise a strategy that keeps some funds growing for the future, your main focus should be on protecting what you’ve earned, not growing your net worth.
Forgetting about Life Settlements
If you’re not in the position to have a nest egg to invest, fear what you’ve saved won’t be enough, or are just looking to cut regular expenses like insurance premium payments, don’t forget about the option for a life settlement. Many retirees aren’t even aware that the option exists to begin with because they or their financial planners have misconceptions about what a life settlement entails and how it can benefit retirees. Learn more about life settlements today on our website, and don’t forget to check out the calculator to see if you qualify.