Are You Making These Common Retirement Planning Mistakes?

Retirement planning can feel overwhelming, especially when you're trying to align your financial decisions with your faith. As Christians, we're called to be good stewards of the resources God has entrusted to us, yet many believers unknowingly make critical mistakes that could jeopardize their financial security in their golden years.

Research shows that even well-intentioned Christians often fall into common retirement planning traps that can significantly impact their ability to maintain their desired lifestyle, support their families, and continue their charitable giving during retirement (Employee Benefit Research Institute, Retirement Confidence Survey) (EBRI). The good news? Most of these mistakes are entirely preventable with proper planning and guidance.

Mistake #1: Procrastinating on Your Financial Plan

"The plans of the diligent lead to profit as surely as haste leads to poverty" (Proverbs 21:5, NIV). Yet one of the most damaging mistakes Christians make is simply delaying their retirement planning. Perhaps you've told yourself you'll start next year, or you're waiting for a better time to begin. The reality is that procrastination steals one of your most valuable assets: time.

Starting your retirement planning even five years earlier can make a dramatic difference in your outcomes. The power of compound growth means that earlier contributions have decades to multiply, reducing the pressure to save larger amounts later in life (Investor.gov: Compound Interest). If you're in your 40s or 50s and haven't started, it's not too late, but every day matters.

Many Christians also make the mistake of approaching retirement planning without a comprehensive strategy. A biblical approach to retirement planning goes beyond simply accumulating wealth; it involves thoughtful consideration of how your resources can continue to serve God's kingdom throughout your lifetime and beyond.

Mistake #2: Underestimating Your True Retirement Expenses

A common assumption among retirees is that their expenses will decrease significantly once they stop working. However, this often proves to be wishful thinking. While some costs may decrease, like commuting expenses and work clothes, others often increase substantially (U.S. Bureau of Labor Statistics, Consumer Expenditure Survey; J.P. Morgan Asset Management, Guide to Retirement) (BLS CES)(J.P. Morgan).

Healthcare costs typically rise with age, and many retirees find themselves spending more on travel, hobbies, and helping adult children or grandchildren (BLS CES) (BLS). Additionally, inflation quietly erodes purchasing power over time, meaning what seems adequate today may fall short in the future (BLS: Consumer Price Index).

Consider also the hidden costs of retirement: potential long-term care needs, home modifications for aging in place, and unexpected medical expenses that Medicare doesn't cover (Medicare.gov: Long-term care and what's covered). A realistic assessment of these expenses is crucial for developing an adequate savings strategy.

Mistake #3: Making Poor Social Security Timing Decisions

Social Security benefits represent a significant portion of most retirees' income, yet many Christians make costly timing mistakes. Claiming benefits at age 62 results in a permanent 30% reduction in monthly payments compared to waiting until full retirement age. Conversely, delaying benefits until age 70 can increase them by up to 32% (Social Security Administration: Early or Late Retirement?; SSA: Delayed Retirement Credits).

This decision becomes even more critical when considering spousal benefits and longevity. If you live longer than expected, which many Americans do, early claiming can result in hundreds of thousands of dollars in lost lifetime benefits (SSA: Actuarial Life Table). The timing of your Social Security claim should be coordinated with your overall retirement strategy, not made in isolation.

Mistake #4: Letting Emotions Drive Investment Decisions

Fear and greed are powerful emotions that can derail even the most well-intentioned retirement plans. During market downturns, fear can drive you to sell investments at precisely the wrong time, locking in losses. During market highs, greed can push you toward excessive risk-taking.

As Christians, we're called to act with wisdom and discernment, not be driven by emotions. Maintaining a balanced, long-term perspective aligned with your values and goals is essential for protecting your retirement funds from the damaging effects of emotional decision-making.

Historical market data shows that staying the course through market volatility generally produces better outcomes than attempting to time the market (J.P. Morgan Asset Management, Guide to the Markets: Impact of being out of the market; Morningstar, Mind the Gap 2024) (JPM Guide to the Markets)(Morningstar). However, this requires discipline and often the guidance of a trusted advisor who can help you maintain perspective during turbulent times.

Mistake #5: Failing to Diversify Properly

Putting all your eggs in one basket, whether it's your company stock, real estate, or any single investment, creates unnecessary risk in your retirement portfolio. Proper diversification helps protect your investments from market volatility and sector-specific downturns (FINRA: Diversification).

As you approach retirement, your investment strategy should evolve. While growth-oriented investments may be appropriate in your younger years, shifting toward more conservative options can help protect your nest egg from significant market downturns when you have less time to recover (Investor.gov: Asset Allocation).

Many Christians also want their investments to reflect their values, which adds another layer of complexity to portfolio construction. Working with an advisor who understands faith-based investing can help you build a diversified portfolio that aligns with both your financial goals and your Christian principles.

Mistake #6: Ignoring Healthcare and Long-Term Care Costs

Healthcare often represents one of the largest categories of retirement expenses, yet many people inadequately plan for these costs. Medicare provides important coverage, but it doesn't cover everything, and long-term care costs can be particularly devastating to retirement savings (Medicare.gov: Long-term care and what's covered).

Consider that the average cost of nursing home care can exceed $100,000 annually in many areas (Genworth Cost of Care Survey). Even in-home care or assisted living facilities require substantial financial resources (Genworth Cost of Care Survey). Planning for these potential expenses, whether through insurance, dedicated savings, or other strategies, is a crucial component of comprehensive retirement planning.

Mistake #7: Carrying Debt into Retirement

Entering retirement with significant debt creates unnecessary strain on your finances. High-interest debt, in particular, can quickly erode your retirement savings and limit your financial flexibility.

Ideally, you should work to eliminate high-interest debt before retiring and carefully consider whether to carry a mortgage into retirement. While some mortgage debt may be manageable, being debt-free provides greater financial security and peace of mind during your retirement years.

Mistake #8: Not Having Professional Guidance

One of the most costly mistakes is attempting to navigate retirement planning alone. The complexity of tax laws, investment options, Social Security strategies, and estate planning makes professional guidance invaluable for most people.

However, not all financial advisors are created equal. Look for a fiduciary advisor who is legally required to act in your best interests and has experience working with clients who share your values and goals (Investor.gov: Understanding Investment Advisers). The right advisor can help you avoid costly mistakes and develop strategies you might not have considered on your own.

A Faith-Centered Approach to Retirement Planning

As Christians, our approach to retirement planning should reflect our faith and values. This means being diligent stewards of the resources God has entrusted to us while maintaining an eternal perspective on our wealth.

Consider how your retirement plan can continue to advance God's kingdom through charitable giving, supporting family members, or funding ministry work. Many Christians find great joy in structuring their retirement in ways that allow them to be generous and impactful during their golden years.

Taking Action: Your Next Steps

Recognizing these common mistakes is the first step toward avoiding them. If you've identified areas where your current retirement planning could be improved, don't let another day pass without taking action.

Start by conducting a comprehensive review of your current financial situation, including your savings rate, investment allocation, debt levels, and projected expenses. Consider how your Social Security timing decision fits into your overall strategy and evaluate whether your current approach aligns with your faith and values.

Most importantly, don't try to navigate these complex decisions alone. The stakes are simply too high, and the opportunities for costly mistakes too numerous.

Your Financial Future Deserves Expert Guidance

At Matt25 Capital, we understand the unique challenges Christian families face in retirement planning. Our team combines deep financial expertise with a commitment to biblical stewardship, helping you develop strategies that honor God while securing your financial future.

We've helped countless Christian families avoid these common retirement planning mistakes and build comprehensive strategies that provide both financial security and peace of mind. Our approach goes beyond just accumulating wealth, we help you create a plan that reflects your values and enables you to continue serving God's kingdom throughout your retirement years.

Don't let these preventable mistakes derail your retirement dreams. The decisions you make today will impact your financial security for decades to come. Your future self will thank you for taking action now, and we're here to guide you every step of the way.

Ready to ensure your retirement planning reflects both sound financial principles and biblical stewardship?Contact us today to schedule a consultation and discover how we can help you build a retirement strategy that honors God and secures your financial future.

References

• Bible Gateway. Proverbs 21:5 (NIV). https://www.biblegateway.com/passage/?search=Proverbs+21%3A5&version=NIV

• Employee Benefit Research Institute (EBRI). Retirement Confidence Survey. https://www.ebri.org/retirement/retirement-confidence-survey

• Investor.gov. Compound Interest. https://www.investor.gov/introduction-investing/investing-basics/compound-interest

• U.S. Bureau of Labor Statistics. Consumer Expenditure Survey. https://www.bls.gov/cex/

• U.S. Bureau of Labor Statistics. Consumer Price Index (CPI). https://www.bls.gov/cpi/

• J.P. Morgan Asset Management. Guide to Retirement. https://am.jpmorgan.com/us/en/asset-management/adv/insights/guide-to-retirement/

• J.P. Morgan Asset Management. Guide to the Markets (Impact of being out of the market). https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

• Medicare.gov. Long-term care and what's covered. https://www.medicare.gov/coverage/long-term-care

• Social Security Administration. Early or Late Retirement? https://www.ssa.gov/benefits/retirement/planner/agereduction.html

• Social Security Administration. Delayed Retirement Credits. https://www.ssa.gov/benefits/retirement/planner/delayret.html

• Social Security Administration. Actuarial Life Table. https://www.ssa.gov/oact/STATS/table4c6.html

• Morningstar. Mind the Gap 2024. https://www.morningstar.com/lp/mind-the-gap

• FINRA. Diversification. https://www.finra.org/investors/learn-to-invest/advanced-investing/diversification

• Investor.gov. Asset Allocation. https://www.investor.gov/introduction-investing/investing-basics/asset-allocation

• Genworth. Cost of Care Survey. https://www.genworth.com/aging-and-you/finances/cost-of-care.html

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Disclosure: This material is for informational purposes only and should not be construed as investment advice. Past performance does not indicate future results. All investments involve risk, including potential loss of principal. Matt25 Capital is a registered investment advisor. Please consult with a qualified financial advisor before making investment decisions.