Are you beginning to think about your retirement? Are you wondering how to save money so you’re ready to enjoy your golden years with a smile?
Whether you’re starting to wonder about setting retirement goals or planning an early retirement, you’ll want to make sure you’ve got your bases covered. There’s nothing worse than getting to your target retirement age and realizing you won’t have enough to live on.
Here are some common retirement planning mistakes you’ll want to avoid.
1. Thinking You Can Work Through Your Retirement
Many folks avoid saving as much as they can now with the expectation that they’ll be able to work through their 60s and 70s. However, health issues and layoffs often get in the way.
If you lose a job in your 60s, it will be quite tricky to find a new one with the same pay and benefits. You could also experience health issues that mean you won’t have the time or energy to work the way you used to.
Some seniors find part-time jobs during their retirement years that allow them the opportunity to stay active and socialize while enjoying a lighter schedule. However, you shouldn’t count on making the big bucks after you’ve reached an age that signals retirement for most.
2. Carrying Credit Card Debt
It can be tempting to carry credit card debt through mid-life. You may have education or health needs to pay for or want to enjoy the time you have with your family by taking a nice vacation.
However, credit cards charge enormous interest rates that you could be carrying for decades. They can also damage your credit and your chance of finding a new home in retirement.
To avoid credit card debt now, make sure you follow a budget and pay it off every month. You can also limit the number of cards you have so you always know what you’re balance is. Entering retirement debt-free is quite liberating.
3. Taking Out College Loans
You may be a little past the credits and finals phase, but your kids may not be. Some people do not save enough during midlife for their children’s college, and they end up with debts they can’t pay off before retirement.
These types of loans can really hurt your cash flow when you’re living on a fixed income. If you want to help your kids pay for school, talk to them about taking out a loan in their own names and then give them cash payments toward it as you’re able.
It also helps to have honest conversations with your children about their education before they go somewhere. You won’t want to be in a position where you’re working for the rest of your life because of their expensive choices. Plenty of state schools and community colleges can offer quality education for an affordable tuition rate.
4. Not Maxing Out on the Match
Many full-time employers offer some type of 401(k) program that comes with a contribution match. This is money you won’t want to miss out on. It may seem like a bit of a sacrifice when you’re younger, but you’ll be grateful for it when you retire.
It’s also important to start saving early on. Plenty of people don’t even think about retirement until they are in their 40s or 50s. In a world where things like food, clothing, and furniture are expensive, it’s easy to put it off. However, you can over $100,000 more for your golden years by beginning your savings plan early.
5. Retiring Too Soon
It can be tempting to stop working full time as early on as possible. You may want to travel or move to a retirement community where you can begin enjoying the years you’ve been waiting for.
However, full Social Security benefits begin when you turn 66. And the longer you work, the more you’ll see in annual benefits.
If you are still confident and comfortable in your employment situation, it pays to stick it out as long as possible.
6. Not Having A Financial Plan
You may have a number of investments as a full-time employee that includes a retirement plan, a house, or stocks and bonds. However, you’ll want to do an honest assessment about what you’re going to have to live on once you retire. This may include downsizing, relocating, or curbing your lifestyle.
Make sure you are really assessing what your housing, groceries, and utilities will cost you each month. You’ll also want to consider things like health expenses and entertainment. It may be necessary to adjust your plans accordingly.
7. Withdrawing Too Much Too Soon
Once you retire and begin living a more leisurely lifestyle, it can be tempting to withdraw money from your accounts too soon. This is especially true if unexpected issues arise.
However, experts recommend that you only withdraw about 4% of your savings each year to make sure that they have enough for the future. You’ll be glad that you tightened your belt when you first retired when you realize you can do things like taking vacations a little later on.
Avoiding Retirement Planning Mistakes
When young people first enter the working world, it seems that retirement is a world away. However, careful planning in youth and middle age can help you avoid a number of retirement planning mistakes. And you can think about enjoying your golden years with peace and freedom.
Don’t stop getting smart about your retirement now. For excellent advice and services to help with future planning, contact us today.