A recent survey found that more than half of retirees have retirement planning regrets. Unfortunately, many of these retirees had to cut back on their lifestyles to compensate for financial shortfalls.¹

Considering their most common regrets may help you avoid making the same mistakes.

Not saving enough

More than one-third of retirees wish they had saved more.2 How much is enough? The amount you need depends on your other sources of income and your anticipated retirement lifestyle.

It might be helpful to consider the 4% rule, a traditional guideline for the percentage of savings that you may be able to withdraw each year without depleting your nest egg over a 30-year retirement. For example, $100,000 in savings would provide only $4,000 in annual income. If you will need $20,000 from your savings each year, you should have $500,000 socked away by the time you retire. Withdrawing $40,000 annually might require $1 million in savings.

If you have a workplace plan, you might start by saving enough to receive any employer match and then increase your savings percentage by 1% each year until you reach 15% or more. You may need to target a higher percentage if you get a late start. Even if retirement is coming soon, you might be surprised by how much you can save if you focus on that goal.

Relying too much on Social Security

Social Security was never meant to meet all your retirement income needs. The average 2019 monthly benefit of $1,461 for a retired worker and $2,448 for a couple would hardly provide a comfortable retirement. The 2019 maximum worker benefit of $2,861 at full retirement age would be better, but that would require maximum taxable Social Security earnings for at least 35 years. If you postpone claiming Social Security after reaching full retirement age, your benefit increases by 8% annually. For example, if you were born in 1960 or later, your full retirement age will be 67 under current law, so working until age 70 would increase your benefit by 24%.³

According to the most recent trustees report, Social Security may be able to pay out only 77% of scheduled retirement benefits beginning in 2034, unless Congress takes action to strengthen the program.⁴ Considering the importance of Social Security, it seems unlikely that benefits will be reduced to that level, but this is another reason not to count too much on Social Security benefits for retirement income.

Not paying off debts

Carrying heavy debt can be a strain at any stage of life, but it can be especially difficult for retirees living on a fixed income. Paying off your home before you retire not only reduces your monthly expenses but also provides equity that could be tapped if necessary for future needs. Before paying off your mortgage, however, it might be wise to pay off credit cards and other high-interest loans.

The road to retirement can be challenging, but avoiding the mistakes made by those who have traveled before you may help you reach your destination with fewer regrets.

^{IMPORTANT DISCLOSURES}

^{This information is prepared by an independent third party, Broadridge Investor Communication Solutions, Inc. and is provided for educational purposes only. The information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. This information is not meant as financial or investment advice pertaining to your personal situation and does not constitute a recommendation. The selection of appropriate investment, insurance or planning options and/or strategies should be made on an individual basis after consultation with appropriate legal, tax and financial advisors. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.}

^{Please note that the information provided may include references to concepts that have legal and tax implications. It is not to be construed as legal or tax advice, and is provided as general information to you to assist in understanding the issues discussed.} 

^{Securities are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements.}

^{Copyright 2019 by Broadridge Investor Communication Solutions Inc. All Rights Reserved}