Wednesday, May 23, 2012

12 of the Biggest Retirement Planning Mistakes to Avoid

Ensuring that you are ready for the future involves spending time planning for what is ahead. However, planning for retirement isn’t always an easy task. With an overwhelming wealth of information available to help you get on the right track when it comes to planning for retirement, you are likely to make mistakes. Listed below are 12 of the biggest retirement mistakes to avoid when planning for your future. Will you be fully prepared for retirement when the time comes?
  • Making risky investments at the last minute in an attempt to make more money. Instead of taking last minute risks, choose to moderately invest over a period of time. This will not only reduce your risk, but will also allow you to make money safely over a longer period of time.
  • Thinking that you won’t live long. Many people have the misconception that they won’t live a long period of time and therefore don’t save enough money for retirement. Plan as if you are going to live until 90 or even 100. There is no way of knowing how long your life will be but you want to live comfortably throughout your entire life.
  • Borrowing from your retirement Plan. This is a mistake that many people make. Don’t make a habit of borrowing from your retirement because a time will come when you are older when you may need every dime.
  • Not knowing how to invest. Be sure that you are aware of what is going on with your nest egg. Simply forgetting about it and expecting it to grow over the years is okay. However, you could make even more money if you stay involved with your nest egg and know the times when you should take risks and times when you should not.
  • Not budgeting. Don’t look at retirement as a time when you can freely spend money as you please. Unless you have planned for this lifestyle, you are likely to run out of money very quickly. Do you best to budget. Yes! You can take those dream retirement vacations but make sure that you have planned for them.
  • Cashing out your 401K when switching jobs. If you change jobs, it is wise to leave your money where it is at. This can give you the comfort and peace of mind knowing that your money will be there when you retire. This is especially true if you are nearing retirement age. Don’t cash out until you will be actually using it for retirement.
  • No post-retirement plan. Will you work part-time after retirement or have some other way to add money to your bank account. A post retirement plan can help you determine how much money you will need to live off of when you do retire.
  • Not calculating in health care. Health care expenses are continuing to rise. Many people make the mistake of not preparing for health care after they retire. Co pays for medications and doctor’s visits can be very expensive. Be sure that you calculate this into your budget when you retire.
  • Not paying down your mortgage. You don’t want to use your retirement money to pay off large home loans. Work on paying off mortgages early on so that you can spend your retirement money elsewhere.
  • Accumulating credit card debt. Realize that the credit card debt that you accumulate now will follow you in the future. Work hard to get all of your credit card debt paid down before your retire so that you aren’t left paying credit card bills with your retirement money.
  • Taking your social security check too early. Wait as long as you possibly can before collecting your social security check. If you can live financially without it, save those funds for a time when you may need it most.
  • Being unconcerned about retirement. Retirement planning is crucial if you want to be financially secure when you are older. Get advice from financial planners to help you make smart investments.
Listed above are 12 of the biggest retirement mistakes that people make. Use the tips listed above to help you make the right decisions when it comes to planning for your future. Will you be prepared for retirement?

Victor works in senior care industry and specializes in writing about topics related to elder care and retirement planning. He is also working as content developer for an online store for reliable walking canes that help elders in preventing fall injuries.

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