Want a Stress-Free Retirement? Avoid These 5 Big Mistakes.

One study sheds light on some of retirees’ biggest regrets.

If you find yourself daydreaming of retirement, you’re likely envisioning warm beaches, plenty of time to relax, and the opportunity to spend your golden years doing what matters most to you. However, not every retirement goes according to plan, and it’s a good idea to avoid the pitfalls that could spoil your senior years. The National Bureau of Economic Research, a private nonprofit organization, recently put out a study exploring the biggest regrets of older Americans, and how those regrets can change based on what people know about their life expectancy. The study found that “many older Americans experience high levels of financial regret.” Keep reading to see the top five regrets the report identified.

1. Not saving enough

Not surprisingly, the most common financial regret for older Americans was not saving enough. More than any other factor, the amount of money you have in retirement is a function of how much you saved and how you invested it. Also, unlike other retirement decisions, there’s no upper limit to how much you can save, and it’s impossible to know for certain how much you’ll need to be satisfied. Among respondents, 52% said they regretted not saving enough for retirement. Of those who said that, the most common reasons for inadequate savings were living day to day, not planning ahead, and expenses. The study also found that regret for not saving enough declines with age, and non-whites and those who hadn’t graduated college were most likely to regret not saving enough. Only 1.5% of respondents said they regretted saving too much.

2. Quitting work too soon

In second place, 34% of respondents said they regretted quitting work too soon. Retiring can be a one-way door in a number of careers. Once you leave your job, sell or close your business, or quit your profession, it can be hard to get back into it if you decide you left too soon. Quitting work too soon is also closely related to not saving enough. If you do believe that you haven’t saved enough for retirement, the easiest way to remedy that is by staying at your job for longer, even if that means working into your retirement years. To work longer than the average American, you’d have to continue past 64. The demographic patterns in regretting quitting work too soon were similar to those who regret not saving enough. Notably, 6% of respondents said that they regretted working too long, showing that it can also be a risk, especially if you’ve saved enough.

3. Not buying long-term care insurance

Close behind quitting work too soon was not buying long-term care insurance, with 33% saying they regretted that. Long-term care insurance, which the study defined as coverage for nursing home care, was less likely to be a regret for those in good health or with high income. Regret for long-term care was also not sensitive to information about life expectancy, nor did it vary much with the age of the respondent. About 7.5 million Americans have long-term care insurance, which is just 13% of the total population of those above 65 (55.8 million).

4. Not owning annuities

This one might come as a surprise because annuities are often controversial, but 26% of respondents in said that they regretted not purchasing a “lifetime payment from an insurance provider” or not buying more annuities at a higher premium. The study also found that feelings about not buying annuities were particularly sensitive to information about life expectancy. When participants were given information about their longevity, they were 42% more likely to regret not having an annuity or not having enough of one. That makes sense since an annuity pays off more the longer you live. Those in good health were also less likely to regret not having annuities than those in worse health, likely because they don’t need as much money for healthcare. Wealthier respondents were also less likely to regret not having annuities.

5. Taking Social Security too early

The survey found that 19% of respondents regretted taking Social Security benefits too early. Deciding when to take benefits can be a difficult decision — you can take them as early as 62, but you’ll sacrifice a higher check later on. So it’s not surprising that some retirees do wish they would have waited to collect Social Security benefits. As with annuities, regret for taking Social Security too early rises with age since delaying pays off more the longer you live. And being informed about life expectancies raised regret for taking Social Security early by 37% for people in good health.

The right plan for you

There’s no perfect formula for the right retirement. The people saying they regret working too long and even regret saving too much are a reminder that you can overshoot your retirement goals and ignore your lifestyle priorities. However, some of the takeaways from the study are clear. It pays to understand your life expectancy, which changes as you get older. It’s also worth considering options like long-term care insurance and annuities, both of which offer downside-risk protection. Lastly, taking care of the basics is the best way to make sure your retirement is successful. Make contributions to your retirement fund regularly, and stay in the workforce long enough so you can enjoy your retirement without having to pinch pennies.