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“I knew I was going to live this long, so I…” I want to avoid living old and poor after retirement, and try to avoid the financial decisions these people over 50 regret the most.
The problem with retirement planning is that by the time people realize their biggest mistake, it’s often too late to do anything about it. For example, people who like to overspend when young are living old and poor in their later years, and it seems like they can only sigh “this is really a lesson in my life.”
How can we avoid these lessons that are too late to correct, so that we avoid them early and make the right decisions? Let’s take a look at the five things 50-somethings regret most about financial decision-making, and think about whether they can get away with it, which might be one way.
Olivia Mitchell, a professor at the Wharton School of Business at the University of Pennsylvania, and Abigail Hurwitz, a professor at the Hebrew University of Jerusalem, surveyed 1,764 Americans over the age of 50 to find out what they regret about their financial decisions.
The poll results had some interesting and practical results, and one or two that were even a little surprising. Furthermore, after respondents knew how long they could live, their sense of regret would have increased several times.
First, the biggest regret is not having saved more by working.Naturally, it will be more difficult to increase your savings if you are not making more money. Thus, most of the respondents blamed themselves for “not planning ahead” and “day after day, trudging along.”
The Penny Hoarder, a personal estate planning website, suggests that you should actually start saving for retirement now. week, the compound interest effect will give you amazing results.
The second regret is that I didn’t purchase long-term care insurance.The reason most people don’t buy long-term care insurance is because they think their existing insurance has already provided protection.
Another reason not to buy it is that the long-term care insurance premium is slightly higher, which is no small burden for many people. According to the American Association of Long-Term Care Insurance, for a 55-year-old single male who wants to secure long-term care insurance in the US, the average annual premium is NT$67,000. The annual payment for single women is up to NT$113,000. The higher premiums for women are due to the higher average life expectancy.
The third biggest regret is retiring too early.The survey showed that after the age of 60 the best way to continue to grow one’s pension is to continue working. In the United States, taking Social Security benefits later can also help. The design of the mechanism is that you can start claiming at the age of 62, but if you get it later, the amount you can get can even increase by almost 80%.
The fourth regret is that 33% of those interviewed regret not having allocated more quota in annuities or similar pension products.
The Penny Hoarder website believes that there are good and bad types of annuity products. On the bright side, an annuity prevents you from spending your money. In any case, as long as you live, you will have an income. The downside, of course, is that it’s an extremely conservative investment. So everything is still a matter of opportunity cost. If you have a smarter method of investing, or at least a rate of return that can outpace inflation, an annuity isn’t necessarily the best choice.
The fifth point actually echoes the fact that previous respondents regretted retiring too early. In the US, a big decision has to be made at age 62, that is, should I start receiving retirement benefits?
Retirement benefits are reduced by 0.5% per month for the number of months between the start of receipt of benefits and full retirement age. For example, if your full retirement age is 67 and you choose to claim benefits at age 62, you’ll end up receiving only 70 percent of your full benefits.
Conversely, if the affected person is relatively healthy and waits until age 70 to start claiming welfare benefits, the final amount can be almost 80% higher. In the survey, the researchers also introduced some respondents to the average life expectancy of modern people, and as a result, knowing the average life expectancy made them regret their past financial decisions even more.
According to the U.S. Centers for Disease Control and Prevention, more than half of seniors who live past age 65 may live to be 80, and a quarter of them may live to be 90. When respondents looked at this data, the number of people who regret not saving more money when they were younger increased by 43%, and the number of people who regret not buying care insurance in the long run it increased by two times.
(Source: MarketWatch, The Penny Hoarder)
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