November 30, 2024
Retirees talk about the mistakes that led them back to the workplace.
{ alert(‘URL copied to clipboard’); }) .catch((error) => { console.error(‘Error copying URL: ‘, error); }); } ]]>
Business Insider talked with over 1,700 retirees to find out how they’ve navigated retirement. Each story presents a different error made by the retirees and highlights the contradictory nature of retirement planning. Though the retirees run the gamut in terms of socioeconomic status, one thing is clear: Social Security is not enough to survive, and retiring early did not work in their favor.
Social Security is adjusted yearly based on the cost of living, yet the increase depends on the state of the economy. The better the economy the less of a COLA increase is received, according to CNET.
“The 2.5% increase in 2025 is smaller than 2024’s 3.2% boost and 2023’s 8.7% jump and is an indication that inflation is cooling.”
Kathleen Rudd retired from her job and opted for early Social Security. The decision is costing her $400/month. The early retirement seemed manageable. With $40,000 in savings, Rudd believed she could take care of her finances and enjoy her life. Faced with the reality, she must sell one of her properties to garner additional income, Rudd wishes she would have continued to work.
“I never should have left that job, and I should have stayed working,” she said.
An unnamed Atlanta resident is another retiree who regrets the early cashout on Social Security. Claiming her benefits five years early, she only receives $936 monthly. The payment is not enough to sustain her basic cost of living or mounting medical bills. The Atlanta resident did not consider the health issues older age would present. As a result, she, like Rudd, went back into the workforce and does not foresee being able to retire truly.
“If only someone had just said, do not take Social Security early, do not invest your money this way,” Sharon said. “If I had somebody who would have just really directed me, maybe I wouldn’t be in this horrible situation because, by 2030, I easily will run out of money.”
The IRS estimates that most retirees should save enough to receive 80% of their yearly salary during retirement. The key is to start as early as possible. If that is not an option start today.
The IRS lists four stages of setting up a retirement plan. The process can be executed with little, but the more you put in — barring any extreme changes in the market — the more you get out.
Stage 1
Choose a plan that fits your needs. Consider how much money is needed to maintain your current socioeconomic position. Think about whether downsizing in retirement is an option. If it is an option, have a plan prepared to transition quickly and at minimal cost. Also, consider how much time you have until retirement. If your retirement planning has begun late, you may not have as many options as a younger investor.
Stage 2
Solidify your plan. The first step to solidifying a plan is writing it down. Arranging a trust will help protect some of your assets in retirement. Create a medical savings account to help ease the cost of care in older age. Decide on a system to keep track of your assets and update your trust and retirement portfolio.
Stage 3
Manage your trust and its individual components. A home, 401(k), IRA vehicles, and many more assets can be added to a trust. Keeping track of tax laws and benefits and making sure those changes reflect in your trust is a must. Depending on your age there may be an exemption for property taxes. Filing the proper paperwork and updating your trust to reflect relevant changes in the law or tax code changes can save you in retirement.
Stage 4
Execute. If your health is good, retirement can last up to 30 years. Adhering to a plan that maps out the years is integral to remaining solvent. Having a hobby that can generate extra income is a plus, but if the hobby is not by choice, then you’ve just rejoined the workforce.
The goal is to rest with little stress. Business Insiders interviewees stated more than just early Social Security was their retirement downfall. One retiree who is also back in the workforce overspent when she retired with abundant resources. Another took a hit in the stock market and became fearful of investing.
Researching the different retirement options. Taking advantage of employer matches and contributions and sticking to a plan can help.
RELATED CONTENT: NBA Star Derrick Rose Announces Retirement From Basketball After 16 Seasons
