Avoid These 7 Mistakes When Planning for Retirement

9:05 pm Retirement Planning

retirement sign e1367526898975 Avoid These 7 Mistakes When Planning for RetirementWhile just getting to retirement can be a challenge, it can be even trickier to get your retirement right.  Here are some tips for avoiding 7 common retirement planning errors:

Saving with no goal.  While it can be tricky to estimate how much you will need in retirement, just stashing money away with no retirement goal in mind is no way to plan.  If you want to continue living as you do today, then you will need to plan to save enough to replace your current income.

Procrastinating.  Those who plan early for retirement have a huge advantage over those who don’t plan at all.  Open an account as soon as possible and start contributing to it, even if you can only afford a little each month.

Entering retirement with too much home debt.  While it isn’t necessarily bad to enter retirement with a mortgage, if you can’t afford that mortgage payment in retirement you will be in big trouble.  Be sure your retirement income can support your mortgage debt.

Not taking advantage of employer match.  Many employers match a percentage of the amount you contribute to an employer-sponsored retirement plan.  If you are not taking advantage of this now, you are giving up free money.

Not having the right tax strategy.  You will have to pay taxes on retirement savings either now or later, and many experts agree that now is better.  That’s because if you pay later, you will pay taxes when you take the money out and on the interest earned.

Not consolidating your retirement accounts.  Did you leave a 401(k) at your old job and forget about it?  Many people do.  When you leave a job where you have a retirement account, be sure you roll it over into a private IRA or your new employer’s 401(k).

Putting your kids before your retirement.  Many people make the mistake of putting saving on hold – or worse, tapping into retirement savings — to pay for a child’s college education or providing other financial support.  Balance your children’s needs with yours – there are loans for college, but not for retirement!

If you need help with retirement planning, contact our Newport Beach law firm.

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