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Retiring between the ages of 62 and 67 is an easy task for many people. You’ve saved and planned, and you’re finally ready to enjoy the freedom you’ve worked decades to earn.
However, this phase can come with some blind spots that many new retirees don’t see until they get involved. GOBankingRates spoke to William Connor Sachs Wealth Advisors About what troubles people in those crucial first years of retirement.
transition period
Many people imagine retirement as an immediate change in lifestyle – from working life to permanent leisure. In reality, it takes time to figure out how you really want your days to look. “Retirement is a big change for most people, and until you actually retire, it can be difficult to understand what you want,” he said.
Activities that seem engaging may become boring as the years go by. Connor recommends taking your first year or two as a trial period to figure out what you really want.
social security time
When to claim Social Security is one of the most debated retirement decisions. It often makes sense to delay your benefits. As Connor said, “Waiting is beneficial; by delaying the start you will earn about 8% extra annually in your benefits. This extra income can potentially result in greater retirement security.”
However, he emphasizes that this decision requires a holistic assessment, including an outlook on your health and whether you need to leave money to heirs. “Social Security ends at death, while retirement accounts and other assets can be transferred,” he said.
health care costs
Healthcare is one of the most underestimated retirement expenses, especially for those retiring before age 65.
“Health insurance costs can increase dramatically when retirees no longer have employer support,” Connor said. “It is important to take health considerations into account before retirement, evaluating out-of-pocket costs for necessary medications and doctor visits.”
retirement account expenses
How you use your money matters as much as how much you have saved. Spending directly from retirement accounts is something that many new retirees underestimate.
Connor recommends setting up a monthly paycheck system, transferring a set amount from your retirement and investment accounts to your checking account. “This helps build discipline around retirement spending and can help avoid overspending, especially in the early retirement years that can cause problems later in life,” he said.
Activity and Connections
Many retirees focus on financial readiness but overlook the importance of staying active. “Activity is good for mental and physical health,” Connor said. Find exercise you really enjoy and do it regularly.
But physical activity is only part of the equation. “Maintain social connections; research has shown that loneliness can have a negative impact on your health and well-being,” she said. “This could include volunteering, helping family or even going back to school.”
Flexibility
Life rarely goes exactly according to plan. That’s why Connor recommends “maintaining financial and mental flexibility to adjust to inevitable unplanned events.”