Retirement Planning Pitfalls to Avoid
4 Critical Retirement Pitfalls to Avoid
Life happens so fast these days. Time speeds by before you know it. So, what do you do now with your retirement years on the horizon? Don’t become so blinded by planning for your career, success, and family early in life that you forget to plan for yourself later in life too. When planning for your retirement, avoid making these classic errors that could potentially threaten your retirement savings, happiness, and financial security.
Mistake #1: You start saving for your retirement in your later years. Solution: You need to start saving when you are young. Don’t be caught behind the eight ball and trying to make up for lost time, and consequentially, lost savings. What if you have put off your savings plan or have depleted your savings because of an emergency? Seek the counsel of a financial planner who can help get your plan on track. Failure to plan will become a financial emergency if you fail to deal with the issue, sooner than later.
Mistake #2: You ignore your debt. Solution: Before you retire, focus on tackling your mortgage, car and credit card debt. It sounds obvious and somewhat self-explanatory; however, some studies now indicate that older Americans are taking on more mortgage and credit card debt at an alarmingly increased rate. Don’t add to this increasing number of older Americans who enter into retirement deep in debt. So, pay off your credit card debt, car debt and mortgage debt as soon as possible. Make your climb out of debt your number one priority so you are not making these payments with your retirement savings.
Mistake #3: You expect a large amount of retirement support from Social Security. Solution: Base your expectations on reality and not what you hope it will be. Don’t place so much of your retirement stability on your expectations of Social Security. Just think, if you underestimate the boost provided by your social security, you will only be pleasantly surprised in the long run. Most Americans take Social Security early—seek advice from your financial planner about the best strategy for you and your family. There are strategies that can help you and your spouse maximize your benefit.
Mistake #4: Your investment decisions resemble the same investing risks that you took in your twenties. Solution: Diversify your retirement investments so you don’t place all of your eggs in one basket. What happens if the basket breaks? What do you have to fall back on? You don’t want to lose all of the hard work accomplished with your own blood, sweat, and tears. The vitality of your retirement savings and investments is not worth that kind of risk even if a high risk investment looks like it will have enormous growth potential. The key word here is “looks”. You do not want to place your future welfare in “looks”; you want to place the future of your retirement stability in “diversification”. The term “diversification” is not just a fad term coined for stock portfolios anymore.
Ultimately, just guarding against these mistakes can drastically improve the outcome of your retirement years. What you don’t think about and plan for now can haunt you in the years to come. It’s wiser to spend the time and energy now securing yourself against these potential retirement pitfalls in the future. So, be proactive now, and adjust your path to your retirement. Start as early as possible, and optimize your golden years! You will be so glad you did.
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