Retirement is the culmination of decades of financial decisions, and the unfortunate truth is that some of those decisions are not always good ones. This is actually very common. Right now, millions of Americans are making financial choices that will hurt them down the road. According to a GOBankingRates survey, an alarming 64% of Americans will retire.
See: What is the average Social Security benefit at 65?
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To better understand the financial decisions that can tarnish one’s golden years, GOBankingRates interviewed real retirees. While they’re largely satisfied, they all had at least one nagging money regret they still think about.
Here’s what you can learn from these retirees’ financial mistakes to ensure a happy retirement.
Create a comprehensive financial plan
Drew Parker went on to create The Complete Retirement Planner when he retired, but he wishes he had paid more attention to retirement planning much earlier.
“When I was younger, I wish I had known the full value of having a comprehensive financial plan,” he said. “I didn’t create one until I was actually ready to retire, but I wish I had created one decades earlier. To my younger self, I would say, “Create a financial plan as early in your career as possible , so you won ‘not have to guess and hope for what it takes to become financially secure’.”
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What you can do
Create a financial plan — either with an advisor or on your own — that outlines your retirement needs and wants and how you’ll get there. Your retirement planning should take into account your values and goals, your risk tolerance, your target retirement age and the lifestyle you want. Once you’ve determined what you want your retirement to look like, calculate how much you’ll need to save for retirement and how long it will take you to save that much, based on the amount of income you expect from your investments, retirement savings, social benefits and other income streams. You can always adjust your plans as needed.
One way to get started right now with your financial planning is to open a high yield account. By choosing this type of account, your money will be safely tucked away, but still working for you and available when needed.
Take advantage of a 401(k)
“Back when we were living paycheck to paycheck with four kids at home, I wish we had put as little as $20 per pay period into a 401(k) or 403(b) (for educators),” said Pam Davis, a former speech pathologist at schools in the Omaha school system. “We thought we needed hundreds every month to save for retirement, and when that wasn’t an option, we had years where we didn’t put anything into our accounts.” When the couple became empty nesters, they tried to make up for lost time, but it proved more difficult than they expected. They never reached their goal.
Fortunately, Davis worked in a field that offered a pension. “I had no choice but to give a lump sum to the retirement account, and my employer matched it 101%. At the time, I didn’t even think about it, but now realize how wonderful it was. In fact, with a little money in the 401( k) and 403(b) accounts, those are our lifesavers,” she said.
What you can do
You don’t have to live below your means to benefit from an employer-sponsored retirement plan. You decide yourself how much you are willing to contribute per pay check. Start small if you need to, and as your salary increases, increase your contributions accordingly.
It is especially important to take advantage of employer matching. Let’s say you earn $30,000 annually or $2,500 per month. If you contribute 5% of your paycheck to your 401(k), that equates to $125 per month. Now, if your employer matches up to 5%, you get the $250 contribution per month instead. You just went from saving $1,500 a year in your retirement fund to $3,000. That’s a big difference.
Don’t focus too much on making money
Former university professor, researcher and social worker Kathleen Fox wishes she had focused less on money over the years.
“I worked very hard most of my life and put just enough aside to live off (Pension and Social Security) when my husband and I retired,” the mother of three said. “The only regret I have is that I didn’t take more time off to spend with my kids. It all happened so fast and I regret every day that I was off work, usually in a job I didn’t really enjoyed while they were learning and growing – days you can never get back.”
What you can do
One of the best parts of retirement is undoubtedly the time you get to spend with family. But if you spend too much time looking to the future, you might forget the importance of the present.
To make sure you don’t waste valuable time with your loved ones, try one of these tips:
Have a family night where you play games, watch movies or simply summarize your days over dinner.
Take regular vacations. There are plenty of ways to get an affordable vacation, including staying at a local hotel and exploring your own city.
Request a flexible work schedule or change your schedule to match your child’s hours.
Take advantage of any family time provided by the employer. Some companies allow you to take a certain amount of time off for children – so don’t miss that dance concert or football game if you can help it.
Don’t waste your money on depreciating assets
“In my 20s, I was single and had reasonably well-paying management jobs in the food service industry, but I also had a history of using a fair amount of my discretionary funds to depreciate assets like several used European sports cars,” said Timothy Wiedman, who worked as an associate professor of management and human resources at Doane University before his early retirement at the age of 62.
“Like used cars, they all developed mechanical problems at one point or another, which usually seemed to require expensive imported parts and/or special tools to fix. I also took several week-long ski trips to resorts in Colorado, Quebec, and New England, and one summer decided me to buy a small sailboat. I justified this poor money management by telling myself that I could always ‘catch up’ on my long-term financial plans later after establishing a more solid career and seeing my income increase.”
Wiedman said missing out on raising interest rates by spending instead of saving made his poor spending decisions an even more bitter pill to swallow.
“At the time, I was only vaguely aware that the earning power of compound interest was based on time, so my initial delay in saving for the future could have serious consequences,” he said. “So while it was important to open an IRA as early as possible, I didn’t do it until I was almost 32 years old.”
What you can do
If you stop buying some depreciating assets, you’ll have extra funds that can be used to open a high-yield savings account that will keep your money growing.
Another option is to invest in a retirement account, like a Roth IRA, as soon as possible.
“If a 23-year-old college graduate puts $3,000 a year into a Roth IRA earning an average annual return of 7.8%, 44 years later at full retirement age, that $132,000 of invested funds will have grown to $1,009,275,” Wiedman said.
“On the other hand, starting the same Roth IRA 22 years later will yield completely different results. Putting $6,000 a year—the current maximum for people under 50—into that Roth IRA for 22 years still equates to a total investment of $132,000 , but at full retirement age, still earning the same average annual return of 7.8%, those funds will have only grown to $324,562. The delayed start will have cost our investor more than $684,000.”
Learn how to make money doing what you love
Robert Sullivan, a retired senior financial analyst, said he would tell his younger self to “follow your dream with your career, but seek expert advice so you have a solid foundation on which to base your skills and learn to earn livelihood. what you love.”
When you do, you may even be able to carry your passion into retirement while still making money from it.
What you can do
Ideally, we’d all have full-time jobs that we love, but even if you’re not passionate about your 9-to-5, there are still ways to make money doing the things you really care about. Consider taking on a side gig that takes advantage of something you enjoy doing. This can be anything from photographing events on the weekend to selling crafts on Etsy or walking dogs in your spare time. Not only will this allow you to do more of what you love, but you’ll also earn the extra income you can use for your retirement.
A little goes a long way
Whether you’re just entering the workforce or well on your way to retirement, the valuable insights of these retirees shouldn’t be overlooked. Many of them emphasize the importance of financial understanding. If more people were educated on topics such as investing, compound interest and employee benefits, perhaps nearly half the population would not be looking at poor pensioners.
Take a moment to assess where you stand financially and be honest with yourself. Knowing where you are in relation to where you need to be can make all the difference in the long run. Hard numbers can be scary, but they can also trigger action that will completely transform your future.
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Erica Corbin contributed reporting for this article.
This article originally appeared on GOBankingRates.com: Retirees Confess What They Wish They Had Done With Their Money