What was the Dumbest Thing You did in Your Retirement Planning? by Bob Lowry
Am I restricted to just one mistake, one dumb decision? Well, for purposes of this post I will hold myself to just one of many dunderhead moves.
The dumbest thing I did in my retirement planning was forgetting to allow for health costs. For someone who is dedicated to budgets and paying attention to finances, this was a very large boo-boo.
For the twenty years before retiring in 2001, my company paid for our family's health care. One of the pluses of being a corporation is the ability to have the company pay some of the expenses of the employees and their families.. The costs are treated as an expense by the corporation and are not taxable to the individuals.
In my defense, even though I was the corporation and wrote the checks every month to pay our family's health care costs I wasn't paying close attention to yearly increases, which were modest compared to today's situation. Plus, I was so used to not thinking about health insurance, I left it out of the retirement budget!
Within 6 months, my oversight became painfully obvious. I was receiving a bill that had no money allocated to pay it. The costs for me, my wife, and two college age daughters was high and ratcheting up every year. The future trend was clear even then: a for-profit health care system meant rates would only increase, along with all the other expenses of health care.
Because we were buying insurance on the individual market I had to find $500 a month in 2002 and almost $600 a month in 2003, just for the premiums. When our daughters graduated from college the costs dipped by a few hundred a month, but then started climbing again, eventually topping out at 25% of our income for health costs.
What could I do? Since I was living off investments and savings, I had one logical choice: cut expenses. Three cars became two. Meals out several nights a week became once every seven days. Yearly trips to Hawaii ended. A reassessment of wants versus needs took place. I squeezed the budget to make room for health care costs.
Everything worked out. We discovered we liked a simpler, pared down retirement lifestyle. I learned my lesson and made sure health care was in every budget from that point forward. Of course, the insane increases of the last several years made me readjust again, until Medicare relieved some of the pressure when I turned 65.
Even now, 18 years later, I can look back at the first year's budget and get the shudders. Missing something that obvious was really dumb.
Your retirement planning oversight doesn't have to be as major as mine to share, though if it is I might feel a little better! It doesn't have to be financial, either. Maybe you moved because you thought you'd love the mountains, and learned the thin air gives you a permanent headache. Or, maybe you thought you'd love to be close to the family....until it became clear they had their own, very full lives without a lot of time for you.
What is on your retirement wall of goofs?