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The Things We Get Wrong Planning For Retirement

Forbes' Kerry Hannon spoke with Lazetta about social security benefits and budgeting in retirement.

Lots of retirees have regrets about their retirement choices. The primary problem: they were too optimistic about their anticipated retirement benefits, which led to them not saving enough during their working years.

If they could go back in time, they’d have postponed retiring, paid off debts before leaving the workforce and learned more about personal finances.

Those are some of the findings in the recent intriguing study, “Subjective Expectations, Social Security Benefits, and the Optimal Path to Retirement,” by University of Southern California researchers María J. Prados and Arie Kapteyn, who culled data from more than 4,632 adults.

The USC researchers also found that women were more likely than men to have been overly optimistic about retirement-benefits expectations. As a result, men “are more likely to save more and reach retirement better prepared,” the authors wrote.

And lower-educated people were more likely to be overly optimistic, too.

“What’s concerning about these findings is that the more vulnerable groups (lower-educated people and women) are the ones who seem to be more optimistic about their future retirement benefits,” says Prados, an economist at the Center for Economic and Social Research at USC.

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