Many people look forward to retirement, planning to explore new hobbies, spend more time with family, travel, or even go back to school. However, that kind of retirement doesn’t just happen – it takes hard work and most of all, planning. If you want a happy and satisfying retirement, here are some mistakes to avoid.
Not planning. According to a 2014 report from the Federal Reserve, 31 percent of people said they had no retirement savings, and 20 percent of people older than 60 said they had done no planning for retirement.
Not saving now. The sooner you start saving, the better off you’ll be. That’s because compounding will allow your savings to grow, and the longer you give it, the more you’ll have. If you haven’t started saving, start now.
Not understanding how much you spend. Many people don’t know where all their money goes. The first step in preparing for retirement should be understanding how much you currently spend and how much you’ll need in retirement. Then you can start taking the right steps to get to you goals.
Not considering inflation. Remember inflation when you’re budgeting for retirement. Goods and services will cost more in the years to come, and you’ll need to account for those increasing costs to maintain your standard of living.
Not maximizing your employer matching. If you’re working for an employer that matches your retirement savings, make sure you contribute at least enough to take full advantage of it. If your employer matches six percent of your salary, and you’re only contributing four percent, you’re throwing away money you’ll need later.
Not exceeding your employer matching. If you can contribute more than your employer’s matching percentage, do it. Employer matching is meant to help you save for retirement, but it’s not a firm guideline of what you should save. Increasing your contribution percentage regularly can help you boost your savings.
Not diversifying your investments. Putting all your retirement savings into a single investment, or even a single class of investments, like stocks, can increase your overall risk and leave you exposed if the market takes a downturn.
Take control of your retirement
We are retirement plan consultants that assist plan participants in getting ready for retirement. The Participant EffectSM is a process that relies on behavioral finance to understand why plan participants make the financial decisions they do and guides them toward better financial health. Find out more at by browsing the rest of our website, or call 866-625-4611.
Tracking Number: 1-444642
This information was developed as a general guide to educate plan sponsors but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, the plan sponsor will be in compliance with ERISA regulations.
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