Your retirement should be an exciting time to relax and enjoy your newfound freedom away from the workplace. To make the most of your golden years, it’s important to plan and prepare your financial future. With a sound retirement plan, you can enjoy your retirement in comfort. So, to help ensure your financial health and stay ahead of the game, here are 5 common mistakes to avoid.
- Waiting to get started – There is an old saying that states that “there is no time like the present.” If you want to maximize your retirement, you should start planning and saving today. Make sure to participate in your company’s retirement plan and put a little extra away in a savings or money market account. Every little bit counts and gets you one step closer to your retirement goal.
- Not setting a goal – It’s hard to reach a goal if you don’t know what it is. Time and again, human nature has proved that creating a well-defined goal improves your chances of success. With a defined goal you can visualize the path clearly and create realistic benchmarks. In retirement planning, it’s important to set a goal so that you budget appropriately and create a realistic plan with your financial advisor. Your retirement goals should include an assessment of your post-retirement budget, overall savings goal, and investment portfolio guidelines.
- Underestimating retirement spending – While we are on the subject of budgeting, here’s another biggie. Be careful to plan a realistic budget for your retirement or you could end up running through your savings faster than you think. Many people plan budgets based off current expenses. This is a great place to start, but don’t forget to consider potential lifestyle changes. If you plan to travel more, take art classes, or dine out more often, you need to add those amounts when planning your savings goal. Try our calculator to learn how much you can spend each month in retirement.
- Being too risky with investments – Anytime you invest, there is some risk involved. That’s not a bad thing as more risk generally corresponds to a higher reward. If you are too risk-averse, you could miss out on wealth-building opportunities. Discuss your situation with your financial advisor to create a risk assessment strategy that works for you. See also our tips on how to protect yourself when investing.
- Missing out on benefits – Employer benefits are an often-overlooked item. When you retire you will no longer get subsidized medical insurance, paid time off, or access to 401k matching. Make sure you calculate what you currently use and will not get once retired. You may find that your benefits are more valuable than once thought.
You want to enjoy your retirement, and we want to help. With some advanced planning, realistic goals, and a little persistence, you can feel confident that you’ll be ready when the time comes. When your biggest worry is how to fill your day, you know you’re there.