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How about that79%of Americans agree that there is a retirement savings crisis?
With prices rising across the board, making your retirement savings last can seem impossible.
Here are fourretirement traps that middle-class retirees should avoid.
Trap No.
This situation causes two main issues.
For one, you are withdrawing your funds when they are sustaining losses.
Historically, the stock market rebounds strongly after negative returns.
In 2022, the market dropped 19.44%.
However, in 2023, there was a gain of 24.23%.
Trap No.
Overreliance on Social Security benefits can derail your retirement plan.
The first step to understanding your Social Security benefits is to view your account through theSocial Security Administrations website.
This will help you understand if youve satisfied your work credit requirements and outline your expected benefits.
Then, only factor a percentage of your benefits into your retirement plan, such as 50%.
This gives you leeway when it comes time to retire.
If you receive more benefits, great!
Social Security was never meant to be a retirees sole source of income.
The average benefit provides only about 40% of a typical retirees pre-retirement income.
Relying solely on Social Security can leave retirees financially vulnerable.
Trap No.
3: Living Outside Your Means
Everyone can benefit from a budget.
In fact, American Century Investments estimates that 85% of individuals have a budget.
Budgets are especially important for retirees who have a set income.
Lets say that on average, you spent $60,000 per year.
However, you become like the other 63% of retirees who believe travel is animportant retirement goal.
Your actual spending is $80,000 per year.
You no longer follow the 4% and are depleting your retirement savings faster than planned.
Before you retire, you must have an accurate picture of your expected retirement expenses.
Many middle-class retirees end up spending more in retirement than they budgeted for.
Trips, hobbies, dining out and entertainment can significantly deplete savings over time.
Sticking to that budget is key.
Trap No.
4: Not Having an Emergency Fund
Emergencies happen.
A recent LendingTree study found that 49% of Americans cant afford a $1,000 emergency.
Even though you might be retired, an emergency fund is still an important component of your savings.
As a general rule of thumb, you should havethree to six monthsof expenses in your emergency fund.
Are you ready for retirement?
Remember, retirement savings look different for every retiree.
Work with aqualified financial planner, advisor or accountantto craft your fool-proof retirement plan.
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