Avoid these 4 common retirement regrets

How to avoid these 4 common retirement regrets

August 9, 2022 5:30 AM

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Workers spend their lives planning, saving and dreaming of their life in retirement, yet for many, it's not all it's chalked up to be.

According to a recent survey by ConsumerAffairs, 46% of retirees do not feel they've accomplished their dream retirement. Just 14% feel they're living the life they planned for in retirement, while 40% feel they've somewhat reached their goal.

ConsumerAffairs found that many current retirees' regrets are related to their finances. While the average retiree has around $172,000 saved by retirement age, according to the Transamerica Center for Retirement Studies, factors like inflation and rising healthcare costs are chipping away at their savings faster than anticipated.

Check out these top regrets — and how employees can avoid making them well before retirement age.

Failing to save and invest earlier in their career

ConsumerAffairs found that 51% of retirees regretted not saving sooner, and 36% wish they'd invested earlier on. While it's important to save for retirement at any age, encouraging employees to start saving as early on in their career as possible can help them build good habits and take advantage of compound interest.

"The sooner you start to save, the more your investments can compound," says Anne Ollen, managing director at the TIAA Institute. "Let's say you have two women who both turned 65. The first one saved $100 a month when she was 25 years old. The other waited until 40 and saved $200 a month. You'd find that the person who started investing when she was 25 would now have almost $450,000. But the woman who waited until she was 40, even though she contributed twice as much per month, would now have barely $200,000. Compounding is extraordinarily powerful."

Failing to save more of their income

Thirty-nine percent of retirees regret not saving more of their income toward retirement, according to the ConsumerAffairs survey. While each person's retirement goals will be different, offering a financial wellness benefit that provides a financial adviser can help employees audit their finances today, in order to plan for their desired lifestyle in retirement.

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"It's really important to take into consideration how employees' situations will differ from one another, and provide employees with education that helps them understand what are some of the paycheck-to-paycheck habits that you need to be setting in place to meet your expenses and set money aside for near, medium, and long-term savings," says Edward Gottfried, director of product at Betterment at Work. "Giving them access to a certified financial planner can really help to make sure that all of the variables that are unique to that employee are taken into account and that they have a plan that really helps them with the situation they're in and how to balance their financial considerations."

Failure to get in better physical health

A third of retirees regretted not taking better care of their health ahead of retirement, ConsumerAffairs found. And time spent tending to health and wellness can prevent costly healthcare issues down the line: Fidelity estimates that a couple retiring at 65 will need $315,000 saved to cover their healthcare expenses. A health savings account is one way to prepare and invest in healthcare costs for the future, and the funds roll over year-to-year, giving future retirees another option for savings.

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"You don't have to spend money from your HSA every year," Richard Ward, the managing director of TIAA Health Solutions, previously told EBN. "An HSA can actually allow the individual to add significantly to their retirement savings accumulation."

Failure to pay off debts before retirement

Sixteen percent of retirees regretted not paying off their debts before reaching retirement age, and an additional 16% wished they had paid off their mortgage before leaving the workforce. Financial wellness benefits like debt repayment are becoming increasingly in-demand, as 77% of Americans have some form of debt, according to data from the U.S. Census Bureau.

"Financial planning tools and budgeting are really top of mind, as people are looking to manage their income, relieve stress, boost their productivity around their financial health," says Jennifer Nuckles, EVP and group business unit leader, at SoFi. "Employers are looking for financial stability for their populations. They don't want people to jump job-to-job. And employees are saying, 'Hey, help me with my financial well-being, I need more assistance.'"