When you decide your retirement is a mistake

After waiting years for their retirement, some people still make one of the biggest retirement mistakes of all: They retire before they are mentally or financially prepared.

Some retirees just get bored. Other seniors miss interactions with colleagues and clients. You might also realize after a while that you haven't saved enough money and need to return to work to bring in more income.

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7 things to do before you retire
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7 things to do before you retire

Figure out your stable retirement income.

Take stock of any pension or Social Security income you expect to get during retirement. This stable income should form the basis of your budget, but probably won’t cover all of your expenses. This is your base retirement income that your savings and investments build upon.

Look at your other retirement income sources.

Determine what you can expect to draw down from your personal retirement investments. You may want to meet with an investment advisor to develop a withdrawal strategy. If you want or need to continue working in retirement, you can also include any part-time income you expect to receive for the first few years of retirement.

Make your retirement budget.

Figure out how much you plan to spend during retirement. This can help you get a handle on whether or not you actually have enough money to retire in the coming year.

One good exercise is to figure out the absolute minimum you need to get by. This means paying essential bills including health care expenses, clothing, food, transportation and other essentials. Then, determine your ideal retirement budget. If you could have the retirement you really want, how much money would that take? This lets you add in things like dining out, traveling and other luxuries.

At a minimum you should be able to cover your bare bones budget indefinitely. But it’s better to delay retirement until you can afford the lifestyle you want. Working an extra year or two might help you to finance a more enjoyable retirement.

Check into your investments.

As you approach retirement, it’s a smart time to double check your portfolio allocation. You should be shifting your money into lower risk, lower reward investment options, such as bonds. You can still take some risks, if you can stomach potential declines in your investment portfolio. Just be cognizant of how a downturn in the market could affect your retirement plans.

Figure out your health insurance.

If you are 65 or older you may qualify for Medicare, but you should also look at supplemental insurance policies you might need. If you don’t yet qualify for Medicare because you’re retiring early, be doubly sure you have enough cash flow to cover an individual health insurance policy.

Use your paid time off.

Check into your bank of vacation time or paid time off. You should definitely use this before you retire, unless you can translate those banked days into cash at the end of your working years. If you plan to look for a new place to live in retirement, that’s an especially good use of any banked time off you have available.

Make a plan for your time.

Figure out what you plan to do with your time during retirement. The transition from working every day to a life of leisure can be surprisingly emotional. The best way to fend off boredom and depression is to stay active physically, mentally and socially.

Take some time now to plan a retirement celebration, vacation or to find some volunteer opportunities you can step into as a retiree. This will help smooth the transition into your golden years.

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"I have found that many people step out of the workforce maybe a year or two too early so they can do things they always wanted to. They want travel and to do hobbies that they haven't had time to do," says Kerry Hannon, an author and career expert based in the District of Columbia. "Around the two-year mark they get a little itchy. A lot of folks find when they are settled that they are bored."

If your retirement has lost its luster, here's how to recover:

Find something to do. New retirees often have a bucket list of travel goals, opportunities to bond with grandchildren and potential new hobbies. "Two years in, they run through their to-do list and are bored and don't have the social network they once had," Hannon says. "They then stumble over the question of what to do."

[Read: 25 Things to Do When You Retire.]

Retirement can be especially difficult for people who retired involuntarily early due to a layoff, to get away from a stressful or frustrating job or to claim workplace benefits before they are discontinued. "I'm not sure that should be your primary reason [to retire]," says Skip Johnson, a financial advisor and founding partner at Great Waters Financial in Minneapolis. "A person should start with an end in mind."

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Most expensive places to retire
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Most expensive places to retire

9. West South Central

Average spending: $28,540

Younger retirees in Texas, Oklahoma, Arkansas and Louisiana spent less than retirees in any other part of the U.S. At $11,742 per year on average, their housing costs are lower than anywhere else in the country. (Go here to see how much house you can afford.) They also spent less on health care. But unlike most regions of the country, where retiree spending falls over time, people in the West South Central region spend more as they get older. By the time people are between the ages of 75 and 84, they’re spending $33,257 per year, in part because of a jump in health care spending to $2,600 per year.

(dszc via Getty Images)

8. East South Central

Average spending: $29,140

Retirees in the East South Central region (which includes Mississippi, Alabama, Tennessee and Kentucky) have the second-lowest spending in the country. They also have the biggest difference in spending between pre-retirees (those ages 50 to 64) and people ages 64 to 74, with annual expenditures falling from $42,261 annually to a little less than $30,000. Downsizing might be the main reason. The older survey respondents spent nearly $7,400 less per year on housing than those in the 50-to-64 age group.

A low cost of living is another reason this region is also home to four of the 10 best cities for people who hope to retire early.

7. East North Central

Average spending: $35,201

People in the Great Lakes states of Wisconsin, Michigan, Illinois, Indiana and Ohio had the lowest average spending outside of the South. That’s good news for people retiring in that region, but it comes with a caveat. Average spending in this region didn’t decrease as dramatically with age as it did in some parts of the country. By the time people reached age 85, they were still spending $31,059 per year on average, more than any other region except New England.

6. Middle Atlantic

Average spending: $38,125

Retirees in the mid-Atlantic states of New York, Pennsylvania and New Jersey spend an average of $38,125 every year, only slightly less than those in the 50-to-64 age group. Their average expenses included $13,440 on housing and $1,940 on health care. (You can determine your housing budget here.)

5. Pacific

Average spending: $38,464

Retirees in Washington, Oregon, California, Hawaii and Alaska spent about $38,000 per year on average, including $2,360 on health care and $18,300 on housing. Their housing costs were the second-highest in the country after New England, which may not be surprising considering this region is home to eight of the 10 least affordable cities in the United States.

(peterscode via Getty Images)

4. Mountain

Average spending: $39,411

Living isn’t cheap for retirees in the vast Mountain region, which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico. But things get better as you age. People in these states spend about $10,000 less per year between ages 75 and 84 than they do in the first decade of retirement.

If you end up retiring in the Mountain region, you’ll have lots of company. States such as Arizona, with its sunny skies and relatively low taxes, are perennially popular with retirees.

3. West North Central

Average spending: $42,240

Stereotypically frugal Midwesterners actually had the third-highest spending in the U.S. People in Minnesota, North Dakota, South Dakota, Iowa, Nebraska, Kansas and Missouri spent more than $42,000 per year on average from ages 65 to 74. About $20,000 went to housing and health care, with $22,000 left over for expenses, including food, transportation, travel, entertainment and dining out.

One reason retirees in this region can spend big? Some are quite wealthy. Minnesota, North Dakota, Nebraska and Iowa are all in the top 25 states in the number of millionaires per capita, according to a study by Phoenix Marketing International.

(rasilja via Getty Images)

2. South Atlantic

Average spending: $44,350

Retirees in the sprawling South Atlantic region, which stretches from Delaware to Florida, have some of the highest spending in the U.S. People living in Delaware, Maryland, West Virginia, Virginia, North Carolina, South Carolina, Georgia and Florida spend $44,350 per year, on average, including $16,980 on housing and $3,000 on health care.

(DenisTangneyJr via Getty Images)

1. New England

Average spending: $46,019

New England retirees are the biggest spenders in the U.S., with annual expenditures of a little more than $46,000 per year. People in Maine, New Hampshire, Massachusetts, Vermont, Rhode Island and Connecticut have the highest housing costs in the country, at $19,507 annually — almost twice as much as those in the cheapest states — though costs fall significantly as people age. Health care spending among 65- to 74-year-olds is also higher than anywhere else, at nearly $6,000 per year, almost twice as much as what retirees in other parts of the country pay.

(kanonsky via Getty Images)

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Take on a volunteer position.Volunteer work can be an antidote to boredom. "We usually talk to them about trying to find something to do, whether it's volunteer work or something else," says Nick Abrams, a certified financial planner with AJW Financial Partners in Columbia, Maryland. "If they want to do something part-time that is stress-free, just find some kind of activities, whether [it's] going down to the local senior center or volunteering at an elementary school reading to kids."

Sometimes, retirees miss their friends and colleagues from work. Many people also tie up their identity in what they do for a living. The solution is the same. "If you are no longer working and part of your identity is missing, we encourage people to volunteer," Johnson says. "Find a board position. Mentor young business people. Give back to your community. Get more involved in church. Go where you can fill your time with something valuable."

Go back to school. Many retirees return to the classroom to learn about topics they are interested in. "Often it’s not about money," Hannon says. "We'll often encourage active hobbies, passions and encourage people to go back to school and pick a topic they enjoy." Some colleges offer tuition discounts to seniors, while others provide classes specifically for retirees.

Taking classes or obtaining a degree can also be a way to learn new skills and transition into another job. "If you take two years out of the workforce, you will need to brush up," Hannon says. "What do you need to ramp up your skills, and how do you do it affordably?" It's not impossible to get back into the workplace, but it will take some preparation.

[See: 15 In-Demand Jobs for Seniors.]

Return to work. Some retirees burn through their retirement savings quicker than they want or have anxiety about large medical bills. "If you retired too young and draw heavily on your assets, that can be a problem," Johnson says. "We do often encourage them, if they can, to work a little. Can they work part-time in their old position? Can they do consulting? Can they find a job?"

Even a part-time job allows you to defer using your retirement savings or take smaller withdrawals. "Just being able to work for pay as a safety net is quite desirable and gives them peace of mind," Hannon says.

A part-time job combined with some budget cuts can usually get your retirement finances back on track. "They may need to change their lifestyle a little," Johnson says. "They could go back to work, and they can make sure their investments are aligned properly for risk tolerance."

If you’ve already started Social Security payments, you still have the option to go back to work. "People who turned on Social Security think they can’t go back to work or they will lose Social Security," Johnson says. "If you have taken Social Security within the last 12 months, you can undo it. You can stop the benefit and pay [the benefits you have received] back. That might be a good option."

[Read: How to Undo Claiming Social Security Early.]

Another option, if you are 66 or older, is to temporarily suspend your Social Security payments. This strategy may even increase your monthly benefit when you resume payments. "They will continue to get deferred income credits," Johnson says. "It grows by 8 percent a year."

However, it's not always easy for older workers to find a new job. You might need to apply your existing skills in a new way or acquire additional qualifications. Reach out to your network of friends and colleagues. "Tell people you’re looking for work," Hannon says. "Get the word out, and don’t be afraid to ask people you know about opportunities."

Copyright 2017 U.S. News & World Report 

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