Everyone plans to retire one day. While some do it earlier, many work until the last day they are able. Eventually, however, we all move on. And, without decent retirement savings, it could all go south very quickly. So, start now and avoid these common retirement planning mistakes!
Not Continuing To Work
Many believe that when they stop work, that’s it. However, this isn’t so! There are plenty of options out there for those that would like to continue working after they retire from their career. From part-time work to freelance and remote jobs, there are many vocations retirees can apply for to keep busy. Plus, it will bring in some bonus funds to add to previous savings thanks to retirement planning. Of course, once you retire, your body will not be in the same shape it was once. Start thinking about what kind of job you would like to have in retirement. If you don’t want one – start saving now!
Starting Social Security Early
In emergency circumstances, like health or severe money issues, taking social security early might be the best option. However, more often than not, it’s best to sign up for the program as late as possible. Just take a look at the statistics! By taking social security a few years early, at the age of 62, one’s monthly income drops by a whopping 30% compared to those who wait. And that extra money can come in handy when no other funds are flowing in. So, while retirement planning, try and plan to retire at the official age of 66 years and 2 months.
Forgetting About Inflation
This one seems so simple, but many forget it! After all, in the hustle and bustle of our lives, we often don’t notice inflation from year to year. Still, the government lets everyone know: there’s an inflation rate of roughly 2% every single year. So, when planning for retirement, always take inflation into account. While 2% each year might not seem like a lot, the rates on real estate, property, stocks, everything, could raise as much as 40% over retirement! Speaking of stocks…
Investing In Stocks
Most financial experts agree: banking on stocks for all your retirement funds is a bad idea. Sure, everyone knows someone who made a mint in the stock market, maybe even retired early because of it! However, using savings and 401k to invest in the stock market rarely pans out. Sometimes, retirees make some money. More often than not, they lose their savings and have to re-enter the workforce. It’s better to trust ETF or mutual funds, but if you do invest in stocks, make sure to diversify.
Sneaking From The Fund
So, you’ve saved up a nice fund thanks to excellent retirement planning. While looking at the number, you might feel tempted to spend some of it on a nice vacation, a college fund, gifts, or perhaps even a donation. However, don’t forget a retirement fund’s real purpose: to make sure that you can retire safely and healthily. Withdrawing it or spending it on things you don’t need will also likely bring a penalty or taxes.
While retirement planning, always triple check your calculations. If you’re not sure how to start planning, make sure to talk to the financial advisor.