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Many Americans who have retired in the past few years have the same regret – how they prepared financially before leaving the workforce. A Nationwide Retirement Institute Study found that 55% of retirees who retired in the last five years regret how they saved for retirement. More than one-quarter (28%) wish they had started saving earlier, and 13% wish they had contributed more to their retirement savings and investments each year.
These savings regrets are having a real impact on retirement. Only 40% of recent retirees are on track with their original budgets and savings plans, and 21% have had to be more conservative in spending than they anticipated.
If you’re approaching retirement or have recently made the change, here’s how to avoid the most common mistakes and create a plan you can feel confident about.
Working with a financial advisor can help prevent retirement regrets
One of the most effective ways to avoid retirement planning regrets is to work with a financial professional, especially during the years before and immediately after retirement.
“Advisors play an essential role, especially during the first few years of retirement, as they help retirees understand new financial realities, manage spending and adjust strategies,” said Kevin Justice, president of Nationwide Financial Retirement Solutions. “The most important step for both those pre-retiring and those who have recently retired is to build a relationship with a trusted financial professional.”
A financial advisor can help turn long-term savings into a sustainable income strategy, adjust plans with market changes and provide guidance when unexpected expenses arise.
Create a realistic retirement savings and spending plan
Once your relationship is established, discuss topics such as contributions, withdrawals and expense planning, and investments. You should also discuss tax-efficient ways to boost savings, such as Roth conversions.
“For pre-retirees and retirees who still work part-time, consider catch-up contributions to IRAs or 401(k)(plans),” Justis said. “Create or revisit withdrawal strategies that balance income needs with longevity risk, and divide expenses into essential versus discretionary spending to prioritize needs.”
They also recommended discussing strategies that prevent inflation and provide guaranteed income in retirement, such as annuities, which can help retirees feel more confident about covering major expenses over time.
Make a plan to cover health-related costs
Healthcare is one of the most underestimated expenses in retirement – and one of the biggest sources of financial stress for retirees.
Medicare premiums, supplemental insurance, prescription drugs and out-of-pocket expenses can add up quickly. Long-term care expenses, in particular, can have a significant impact on retirement savings if they are not planned for in advance.
“Your advisor can help you estimate Medicare premiums, supplemental insurance and out-of-pocket costs, as well as help you locate long-term care insurance,” Justis said.
Planning for these expenses early can help prevent unpleasant surprises and reduce the risk of needing to downsize your lifestyle later in retirement.
Planning in advance can make retirement more secure
While many recent retirees wish they had saved more or started earlier, it’s never too late to improve your financial outlook—or to avoid the same regrets if retirement is still ahead.
“By communicating openly about concerns and goals with an advisor, both those planning to retire and those already in retirement can feel more confident about their plans,” Justis said.
With the right guidance and a thoughtful approach to saving, spending, and health care planning, retirees can replace uncertainty with confidence, and enjoy the retirement they’ve worked so hard to build.