Regrets, I've Had a Few: 7 Common Financial Regrets (and How to Avoid Them)

Navigating an Abundant Retirement with Carol Dewey

Key Takeaways:

• A recent study reveals seven financial decisions older investors regret not making to better prepare for the future.
• Being aware of these regrets can help us avoid similar decisions today that may impact our financial security later in life.
• Many of these regrets center around retirement and the need for more savings due to longer life expectancies.

In this episode, Carol shares the findings of a study on financial regret among older adults and provides steps to avoid such regrets in our own financial decisions.

Regret 1: Not Saving Enough (57% regretted)

• Start saving early, even small amounts can add up over time.
• Set a budget, track expenses, and redirect savings towards retirement.
• Periodically review and adjust your savings plan.
• Take advantage of employer matching contributions.

Regret 2: Not Buying Long-Term Care (LTC) Insurance (40% regretted)

• Understand the potential costs and benefits of LTC insurance.
• Start the conversation early and explore options with a financial advisor.
• Carefully review policy terms, coverage, and exclusions.
• Long-term care expenses can be significant, making planning crucial.

Regret 3: Not Delaying Social Security Benefits (23% regretted)

• Claiming benefits at 62 leads to reduced monthly benefits.
• Delaying benefits until 70 can increase monthly benefits.
• Understand the impact on retirement income and financial security.
• Consider individual financial situation and retirement goals.

Regret 4: Not Purchasing Lifetime Income Payments (33% regretted)

• Annuities provide a guaranteed income stream in retirement.
• Understand different annuity types and how they fit your plan.

Regret 5: Depending Financially on Others (10% regretted)

• Strive for financial independence by saving and investing.
• Have a written financial plan and clear goals.
• Communicate with family and collaborate on financial decisions.

Regret 6: Not Working Longer (37% regretted)

• Working longer allows for more earning, saving, and delaying Social Security.
• Can decrease mortality risk, sustain cognitive function, and provide social interaction.
• Consider personal circumstances and preferences when deciding.

Regret 7: Underestimating Retirement Length (associated regret increase)

• Average life expectancy doesn't account for the likelihood of living longer.
• Prepare financially for the possibility of a longer retirement.

Remember, learning from others' regrets can help us make better financial choices. Stay tuned for more episodes on navigating an abundant retirement.

Sources:

• National Bureau of Economic Research, 2022
• U.S. Census Bureau, American Community Survey, 2017
• U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, April 2019
• AARP, 2021
• Center for Retirement Research at Boston College, 2021
• Center for Disease Control and Prevention, Mortality in the United States, 2021