August 6, 2011 — (Note: This is a 3 part series. See links to Parts 2 and 3 in the “Further Reading” section at end). The most beautiful thing about retirement is that is the perfect moment to reinvent yourself. The kids are grown, your mortgage might be paid, your fight up the career ladder is behind you. It’s a “do-over”, now you are free to do anything you want to, an amazing opportunity! You are only limited by your imagination and your resources (and the former can help with the latter).
To help you maximize this unique chance to start life all over again, here is our list of the 10 worst retirement mistakes you can make. We hope you will keep them in mind so that your reinvention comes off without a hitch. And if you have your own mistakes or success strategies to add, please let us know in the Comments section.
Worst Retirement Mistakes
1. Start planning your retirement the day after you retire. That’s too late. Smart retirements have regular planning sessions where you think about the W questions – Where, When, Why, What (are you going to do) – and How you are going to afford it. Develop a plan and put it on paper… before you get that gold watch.
2. Retiring too soon. Some folks are so eager to get away from their jobs that they jump the gun. Premature retirement, either before you are ready emotionally, or before you can really afford it, can be disastrous. It’s hard to get back into the employment scene after you’ve left and your skills are rusty. Be sure before you pull the trigger.
3. Continue to live in the suburbs. Sure, you might want to retire in the same house you do now. But here are three reasons not to: Your maintenance, utility, and tax expenses will be much higher than many other alternatives. When you get to the point that you can’t drive anymore you will be trapped in your home, without any good mass transit options. And lastly, you will probably be more isolated socially than if you lived in more of a communal setting like a city, walkable town, active community, or independent/assisted living/CCRC facility.
4. Don’t visit enough places before you decide where you are going to live. You might think you have checked things out, but until you have seen a place you don’t really know much. Any one retiree might be happy in dozens of towns or communities. Explore a little and be sure.
5. Don’t rent before you buy. It is so tempting to visit a town or community and buy a brand new unit. But to figure out what it’s really like living there, it will take more than a brief visit. We have heard this refrain enough times to repeat it again – “if only I had rented first, I would have known…” Renting is easy, and in this unsettled environment, almost always a good idea.
6. Don’t do enough due diligence. We are always amazed at the otherwise careful people who brush over some of the most basic due diligence issues before they buy. The list of issues you need to check up on is long, and important. Those include reading the Home Owners Association rules, studying the most recent financial report, getting minutes from HOA meetings, finding out about foreclosures and dues arrears, finding out what your neighbors are like, getting a fix on maintenance sinking funds, etc. If it’s a new community there will be other questions – how likely is it the community will sell out, what happens when ownership is transferred, what kind of obligations and assets will be transferred to the Home Owners association. Your realtor and attorney should be able to help you with all of these. Too many communities are having too many issues for you not to investigate everything carefully.
7. Move too far from family & friends. In our experience the #1 reason for an unsuccessful retirement move is that the person moved too far from their families and/or friends. Your children and grandchildren exert a very powerful tug – so before you move too far away, carefully consider how you will compensate for that.
8. Assume your kids will take care of you in your old age. Your kids have their own lives. Even if they want to take care of you, they might not have the time, temperament, or resources. So plan out in advance where you will live and what you will do if you are fortunate enough to live a long time after retirement, when almost everybody needs some kind of assistance and companionship. Likewise, try to plan for 1 move rather than a couple of moves.
9. Move to an incompatible environment. Examples would be moving to an active adult community if you hate rules, moving to a rural environment and you crave activity, or moving to a liberal environment when you are a conservative person. Visit before you rent, rent before you buy, and there will be fewer surprises.
10. Move to a new community without a plan to meet people. If you move to an active adult community it is hard not to meet people. But folks who buy a home in a general neighborhood or suburban development need a plan to meet people and build a new social life – they need to join a church, club, volunteer, take part in activities, or get a job.
– Part 2: 10 More Retirement Mistakes You Don’t Want to Make
– Part 3: Avoid These 6 Retirement-Wrecking Mistakes
– Retirement Ranger
– Quiz: How Ready for Retirement Are You?
– Countdown to Retirement Success
What do you think are the worst retirement mistakes? Have you made some yourself? Please share your ideas about retirement mistakes – and successes – in the Comments section below.