September 19, 2022

We often hear stories about retirees sharing money mistakes they regret in retirement. Looking at the flip side of the coin, what are some financial moves retirees almost never regret? 

Working With a Financial Professional

It is incredibly rare for a retiree to regret working alongside a trusted and qualified financial advisor or planner for their retirement needs. These individuals, after all, are here to look out for the retiree’s best interests. 

Kurt Heineman, financial planner at Vision Casting Financial Planning, uses the example of rising interest rates in the current economy. Financial planners can help retirees think about ways to make low-risk returns on cash they may be holding for short or intermediate purposes they might not be aware of if they were working on their own. 

“It can be very reassuring to have a retirement plan and someone who will walk alongside you as you transition into retirement,” Heineman said. “Financial planners can help retirees build, monitor and manage a financial plan which can lead to peace so you can enjoy the retirement you worked hard for.”

Planning When To Claim Social Security

According to the Social Security Administration (SSA), retirees at age 62 are eligible to start claiming Social Security. Some retirees may decide to delay retirement until age 70 to receive the full benefit amount.

It is often quite difficult to determine the right timing for Social Security, and retirees rarely regret carefully considering when they will claim Social Security to receive a financial boost. Wade Pfau, professor of retirement income at The American College of Financial Services, said claiming Social Security does not have to happen at the same time you retire. 

“A thoughtful claiming strategy could add more than $100,000 of lifetime benefits to a retirement plan,” Pfau said.

Using Proper Annuity Solutions

Mark Kennedy, founder and president of Kennedy Wealth Management LLC, specializes in helping people who are within reach of retirement or who are already in retirement. The primary money move Kennedy’s clients never forget is building in guaranteed lifetime income and guaranteed growth using the proper fixed index annuity solutions with lifetime income riders. 

While the market is down everywhere, Kennedy said the lifetime income for retirees is not. Many advisors lean predominantly on the stock and bond markets to provide their clients with incomes for life, but Kennedy recommends taking the time to understand the proper and correct annuity solutions and weaving them into a client’s overall retirement income plan.

“I can’t tell you how many clients I’ve spoken to on client review calls this year and they always say, ‘I’m glad you encouraged me to go with that annuity. It’s a lifesaver,'” Kennedy said.

Maxing Out Their Roth IRA

For those who qualify, Rafael Rubio, president of Stable Retirement Planners, said retirees who max out their Roth IRA as opposed to a traditional IRA benefit in retirement. This gives retirees a bucket of tax-free assets they can pull from or create tax-free supplemental income.

Maxing Out Their 401(k)

Retirees who work for companies where employer-sponsored retirement plans are offered, like a 401(k), rarely regret taking the opportunity to max out their contributions. The earlier one can start doing this, and prioritizing contributions throughout their working career, the better especially if you contribute at a level your employer is willing to match.

“Doing this almost always gives retirees more options on how to live their lives in retirement,” said Eric M. Jaffe, CEO and founder of Mosaic Wealth Partners. “Typically, it provides greater peace of mind when retirees have adequate funds available in retirement to maintain their desired lifestyle.”

Diversifying Investment Vehicles

Most retirees never regret planning ahead for retirement to meet their goals and investing early to reap the benefits of compound interest. Another money move retirees seldom regret is diversifying their savings and investment vehicles. This includes accounts like IRAs, Roth IRAs, employer-sponsored retirement plans and general accounts that do not necessarily have particular tax efficiencies under the Employee Retirement Income Security Act. 

“Each of these accounts has different contribution limits and availability as well as varying tax ramifications while saving and also while distributing funds in retirement,” Jaffe said. “For most retirees, having different buckets from which to distribute assets in retirement with varying tax consequences when doing so proves to be beneficial.”

Eliminating Debt

Steve Sexton, CEO of Sexton Advisory Group, said eliminating debt before you retire does more than prepare you to make a smoother transition into the next chapter. It enables you to earn interest rather than paying interest. 

“Many people carry high interest rate evolving debt, which means your expenses go up when interest rates go up – making your monthly budget unpredictable in retirement,” Sexton said.

Whether you’re planning for retirement or in a completely different chapter of your life, nobody who has ever eliminated debt, like student loans, car payments or mortgages, can say they regret not being in debt. Focus on paying off any existing debt, or paying in full on any big expenses, prior to retirement, before you decide to retire.