Planning for your retirement very well may be the longest project you ever embrace. Most Americans spend about 50 years of their life working at least part-time, which amounts to a stunning 35% of your total life. It can be tough to envision what retirement will be like, let alone remain on track for multiple decades. Ninety percent of retirees needlessly suffer due to these retirement planning mistakes, so make sure you don’t make them!
Not Having a Retirement Plan
It’s easy to put off retirement planning until tomorrow. Then tomorrow becomes next week, next month, next year, next decade. Sure, it can be tough to look at where you’re going wrong or to realize that you’re not saving enough. But the only way to get your retirement on track is to have a plan. After all, if you do not know how much money you need, you’ll be chronically plagued by a sense of anxiety that you’re not saving enough—even if you’re making great progress.
Not Saving Enough for Retirement
Retirement planning is not magic. There’s no single account that will make planning for retirement easy. Instead, retirement is ultimately about the hard work of socking away money week after week, month after month, year after year—even when you’d rather spend it on something else or are worried about other financial obligations. No time is more valuable than now, because beginning now means benefiting more from interest payments than you will if you wait another five years. Thus failing to save enough money is the single most significant retirement mistake.
Counting on Government Programs
Medicare and Social Security are great benefits in retirement, but there is no guarantee they will be there forever—and there’s certainly no guarantee that you can expect the sort of payments your parents are currently getting or once received. Don’t count on these programs to supplement your income, and don’t factor them into your retirement plan. Instead, hope that they’ll be there. If they are, then you’ll have a nice cushion you can use to do something fun, rather than jut keeping you afloat.
If you’re nearing retirement and concerned about paying your bills, it’s fine to take into account Social Security and Medicare. You may also want to look into reverse mortgages, which offer reliable income with no requirement that you repay the loan. You need only be over the age of 62 and to own your own home.
Waiting for a Convenient Time to Save
Saving money is always difficult. When you’re 25, you’re probably broke. At 35, you may be starting a family or buying your first home. By 45, you might be concerned about saving for college or supporting your parents. Don’t wait for the right time, or you’ll wait right through retirement. Start saving today. Even if all you can afford is a dollar a week, some savings is better than none at all.
Wasting Your Money
It doesn’t matter how great the investment seems. If you spend more money on the financial advisor or investment fees than the investment offers, you might as well light that money on fire. The same is true of employer-matched retirement contributions. If your employer will contribute money to your 401(k), that’s free money! Max out your contributions every year. If you don’t, you’ve abandoned the easiest, lowest stress way to save, and neglected one of the most significant benefits of employment.