5 Biggest Money Mistakes When Retiring in the Midwest

Retiring with little to no savings is a situation that even Americans who made the effort to save can find themselves in. Creating a nest egg is the important first step, but there are a number of ways that you can end up poorly managing it — before and after retiring.

Learn More: Here’s How Much Savings Is Needed To Retire by 40 in Every State

Find Out: The Surprising Way You Can Get Guaranteed Retirement Income for Life

Some of the universal mistakes include taking on too much risk or withdrawing too much, too soon. While the Midwest is attractive to retirees for its relative affordability, retiring still requires careful planning.

If you’re retiring in the Midwest , these are the biggest areas of concern through which you could slip up, according to Johnson Wealth and Income Management .

Sponsored: Protect Your Wealth With A Gold IRA. Take advantage of the timeless appeal of gold in a Gold IRA recommended by Sean Hannity.

Retiring Too Early

A Bureau of Labor Statistics survey found that the average boomer-aged worker in Iowa switches jobs roughly 12 times, while a Federal Reserve Bank of Minneapolis survey recently indicated that workers are struggling to find jobs that offer higher wages and stronger benefits among the rising cost of living.

It’s recommended to not change jobs or leave the workforce without fully assessing the options you have available. You could end up losing out on 401(k) employer contributions and stock options without remaining employed for a certain period of time.

Check Out: 5 Places in America To Retire That Are Just as Cheap as Mexico, Portugal and Costa Rica

Not Accounting for Taxes

If you have a 401(k), traditional IRA or other tax-deferred account, you need to be mindful that taxes will eat a portion of your balance. If your tax bracket will be higher post-retirement, a Roth IRA or Roth 401(k) is a good idea so that your withdrawals will be tax free. If your tax bracket will be lower, opt for a traditional IRA or 401(k) so you pay lower taxes after retiring.

South Dakota is a Midwestern state with no personal income tax. This contributes to it being seen as a good place to retire, according to Travel + Leisure , but don’t forget that you still have to consider the overall tax burden (i.e., property taxes).

Not Considering Future Healthcare

It’s important to factor healthcare into your financial assessment, as medical issues are an indirect side effect of retiring. Because the benefits and costs are relative, you shouldn’t be complacent with a single plan. Rather, you will want to reassess your coverage annually. Moreover, medical bills are some of the largest you can come across. You can expect to pay well over $100,000 in healthcare and medical expenses throughout retirement.

Not Estate Planning Properly

This is especially important if you have children, as you’re naturally going to want to take control of how your wealth is distributed after you pass. Ensure that the power of attorney is in trustworthy hands and that you have carefully worked out the specifics. It will make things easier for not only yourself, but also your family.

Not Setting Up Your Nest Egg

You want to avoid spending too much or, in other words, not saving enough. Fidelity recommends saving at least 15% of your pre-tax income each year. If you aren’t receiving employer matching, you’ll need to factor increased savings. It doesn’t stop with medical issues — you never know when a disaster will strike and set you back thousands of dollars. Do not skimp on an emergency fund, especially when employment for retirement-aged individuals is difficult.

This article originally appeared on GOBankingRates.com : 5 Biggest Money Mistakes When Retiring in the Midwest