Habits That Can Ruin Your Retirement

Senior woman looking worried
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By David Ning

Many habits creep into our lives without us thinking too much about them. Once bad habits are formed, they often become extremely hard to change. Don't let these behaviors become a part of your lifestyle:

Treating retirement as the destination rather than the beginning of another part of life. It's easy for people who are still working to think of retirement as the end goal. But it's a mistake to concentrate only on reaching the finish line with no fuel to keep going afterward. Think about it: Your retired life could be even longer than your working career. Whether it's having assets that last, a strong social network to keep you company or a solid professional network just in case you need to go back to work, it's best to think of retirement as the start of something new instead of the grand finale.

Believing retirement will solve all your problems. You will have less stress from work and more free time, but retirement will bring about other challenges you didn't have while you were working. Don't postpone solutions until retirement. Fix your problems now so you don't carry them into your golden years. Burnt out from work? Find another job. No time to pursue your passion? Find time by becoming more productive at what you do. If you don't live a balanced life now, there's no guarantee your retirement will be any less miserable.

Anchoring a spending number against your previous salary. Many people estimate that they will spend 70 to 90 percent of their previous salary in retirement. But working from your paychecks is rarely the best way to develop an efficient budget. Build a retirement budget from the ground up instead. Start from $0 and add only expenses that are necessary or will significantly benefit you in retirement. For each cost, ask yourself: Will spending that extra cash really make your life better, or is the expense just there because it's always been there?

%VIRTUAL-article-sponsoredlinks%Avoiding investment risks. Reducing volatility and lowering risks in retirement makes a lot of sense. But not everybody can afford to just buy CDs for the rest of their retirement life and still maintain their desired lifestyle. Inflation will certainly erode any conservative investment strategy given enough time. In a way, conservative investors risk the most because they are almost guaranteeing lower investment performance. For many people, it's more important to embrace some retirement risk. The key is to understand the risk you are taking and to know how to react and deal with the situation when risks show up.

Stop being active. It's easy to become lazy in retirement because there's no longer the external push for you to move around every single day. But if you spend just a couple more hours sitting in front of the TV every day, you will see an erosion of muscle and energy. Stay active in retirement, because several decades of deterioration in front of the tube is going to rob you of enjoying the best years of your life.

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Habits That Can Ruin Your Retirement
For years, security professionals have emphasized the importance of shredding your personal documents before you throw them out. But Holland notes that shredding isn't as much of a priority as it used to be. "There aren't nearly as many documents with personal information out there as there were even just two years ago," he explains. "These days, it's much easier to get your information off your computer."

Passwords are your first line of defense against intruders. But, as Holland points out, even the most careful people sometimes have password breaches. "I've helped chief privacy officers from health care and security firms," he notes. "If they're getting hit, then anyone is vulnerable." While Holland notes the importance of having a good password, he emphasizes that the most important thing is paying attention to password breach notifications. If you hear that one of your passwords may have been breached, he counsels, change it immediately. And, because many of your accounts may be linked, he notes, it's not a bad idea to change the rest of your passwords as well.

One piece of advice that you don't often hear is to keep on top of software updates. But, Holland argues, updating your operating system, your software, and your security programs is one of the easiest and most important ways to ensure your security. Software companies spend a lot of time and money trying to stay ahead of online intruders -- it only makes sense to take advantage of their work.
Even if you are convinced that your security is state-of-the-art and your password is unbreakable, it never hurts to double-check your most sensitive accounts. Holland suggests regularly checking your bank and credit card statements to ensure that there aren't any inappropriate charges on your accounts. As a side benefit, this is also a great way to catch any unexpected fees that your bank may try to spring on you.
When a breach happens, a fast response can mean the difference between a minor annoyance and a major pain in the neck. With that in mind, Holland suggests talking to your bank about having transaction alerts placed on your account. Every time your account is credited with a transaction over a particular amount -- $50, for example -- your bank will send you an e-mail or text notification. If it's an expected transaction, you can discard the message; if not, you'll be able to respond immediately.
Every year, you are entitled to a free credit report from each of the reporting bureaus. Holland suggests taking advantage of this free service, noting that your credit report is a great way to track your outstanding debts and ensure that nobody is trying to open false accounts in your name. He emphasizes, however, that the best way to get your free report is by going to AnnualCreditReport.com, not FreeCreditReport.com. "That site's a scam," he laughs.
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