Ann Brenoff at HuffPost50 wrote a great article entitled The 5 Biggest Mistakes People Make When Planning For Retirement. Her article cites some of the pitfalls people fall into when planning for retirement. We thought there was value in passing along some of Ann's tips, along with a few of our own. Planning for retirement is serious business, even for those lucky few who have the “retirement trifecta” in hand; A pension, proceeds from a 401K/IRA, and social security!
There is a whole host of strategies one should consider while planning for retirement. Some of the conventional strategies involve downsizing from the big suburban home and moving into the city. Examining where you live is another important consideration; is this the optimal location for your retirement? What about retiring overseas? How is your health and what are your healthcare needs? These are just a few of the many considerations one must make before retiring.
Ann Brenoff says you should avoid the following mistakes when planning for retirement:
- “You don't save”. Did you know BankRate.com says that less than 1 in 5 people save (anything) on a monthly basis? It's unfortunate to say the least. If you're someone who isn't a saver, and you spend all of your monthly income on a regular basis, this may be a sign that either your burn rate is too high, or your paycheck is too low (or both). If you've fallen behind, you need to catch up. This means some hard choices.
- “You still don't fully fund your 401K”. This is a mistake many people fall into. Ann cites an alarming statistic; “According to the 2014 “How America Saves” report, 33 percent of employees don’t participate in a 401k program even though 95 percent of them would receive a match.” For most people this is leaving money on the table, and irresponsible on a number of levels. If you don't understand your own 401K program, and you've neglected to fully fund it, make sure you speak to one of your benefits advisors to get back on track!
- “You still play the stock market like a roulette table”. Nearing retirement means taking less risk with your assets. The last thing you need is to risk your hard earned retirement savings on risky bets. Do some research online, or speak to a financial planner for good advice on dialing back your investment risk profile as you near retirement age.
There's more to Ann's list, and you can read more by following her over at HuffPost50. Remember, retirement takes significant planning over a period of time. If you're serious about retirement – do your homework, avoid the all-to-common mistakes, and plan ahead!