When I'm planning my personal goals, I often consider how I might look back on a decision in the future. For example, I took my family on a month-long road trip several years ago because I wanted to try living a different lifestyle for a short time.
I wouldn't have regretted this if I didn't do it, but I would have always wondered if I should have taken the risk.
Financial regrets can work the same way. I try to think of how I might reflect later on a decision to save or spend. If you're trying to map out the right course of action for your financial future, take it from some retirees who wished they made different decisions. Here are just a few of their regrets.
1. Not saving enough
One of retirees' biggest regrets is not setting enough money aside for their retirement. A recent survey showed that 59% of retirees say they regret not saving more, and 60% say they should have started saving earlier.
According to recent Federal Reserve data, the median retirement account savings balance is $87,000.
Whether your retirement account has more or less in it, one of the best ways to boost your retirement savings is to use tax-advantaged savings like an individual retirement account (IRA). This year, you can contribute up to $7,000 in an IRA (or $8,000 if you're 50 or older).
IRAs can be an excellent tool for building retirement savings because they allow you to put money in a wide variety of investments, including low-cost index funds, individual stocks, bonds, annuities, and more.
2. Overspending in retirement
The American Association of Retired Persons (AARP) said recently that some retirees regret spending too much money after they stop working.
I know some people who were upset when their parents bought a boat in retirement. It wasn't a financially devastating decision, but it likely caused more strain on their budget than necessary.
Some common overspending habits among retirees include buying a boat, living in an expensive resort community, buying an RV, and owning a timeshare. Some retirees also regret spending a lot of money upgrading their homes or building a new dream home.
3. Claiming Social Security too early
Many people can begin collecting Social Security benefits at age 62. But starting at that age could reduce the maximum benefits you receive.
Waiting until age 67 will allow you to receive 100% of your benefit, while taking it early could reduce the amount by up to 30%.
Nearly one-fifth of retirees wished they'd waited to collect their benefits.
4. Not working longer
This regret goes hand in hand with taking Social Security benefits too early. About one-third of retirees say they wish they had worked longer before retiring.
While this is a common regret among retirees, it's also important to mention that not everyone gets to decide when they stop working. A recent Edward Jones survey found that 40% of their clients were forced into retirement -- sometimes from company downsizing, but often for personal health reasons.
5. Not planning for long-term care
A survey from the Wharton School found that 40% of retirees regret not buying long-term care insurance. This type of insurance covers some or all of the cost of assisted living facilities and in-home care.
The Department of Health and Human Services estimates that a retiree who is 65 years old right now will have, on average, $120,900 worth of long-term care costs.
With men's average life expectancy of nearly 75 and women's topping 80, paying for long-term care insurance could be a good move for many retirees.
Having financial regrets is normal
By examining retirees' financial regrets, we're not focusing on their missteps. Instead, we're learning from their experiences to make the best financial decisions possible.
I don't know anyone who's never made a mistake with their finances, so don't worry about aiming for perfection. But if you're prone to making certain errors on this list -- like overspending, for example -- it might be a good idea to devise a game plan now, so you can avoid the same mistakes once you reach retirement age.
