Planning for retirement is one of the most important things you will do during your lifetime, and any mistakes you make today can be extremely costly later. In fact, according to experts, of those people that do have retirement plans, about 90% will still live in poverty or run out of money before they die.
You Need a Goal – Having an IRA and/or 401k in place is not enough. You need to know how much money retirement will cost you so that you can start planning and working toward that goal. Unfortunately, most people never calculate this important number and don’t know there’s a problem until it’s too late.
Not Saving Enough Money – Simply socking away 2 or 3% in your 401k isn’t going to cut it. Recent surveys revealed that about 75% of people between the ages of 55 and 64 had less than $56,000 saved for retirement. To keep from making this mistake, you will need to start saving for retirement, and do so aggressively. Put as much money as possible away now so that you’re not scrimping for cash later.
Not Saving While Still Young – While planning for retirement might not seem a like a big deal when you’re in your 20s and 30s, the truth is, time flies. Before you know it, you’re pushing 50, retirement is just around the corner and you’re just starting to think about saving. If you haven’t already started a retirement plan, do it now.
Never Rely on Social Security or a Pension – Company pension plans are a risky thing to rely on as many are underfunded and the majority of companies are moving towards dropping pension plans altogether. Social Security doesn’t offer much more security, and even if it did, the benefit amount that you receive is likely just a fraction of what you’ll need to live.
Not Investing – One of the best things you could do as far as a retirement plan is to add some investments beyond your 401k. If you get some extra money, why not put it in some type of investment, such as annuities or CDs. Of course before you invest, you should retain the services of a professional financial consultant to help you choose the investments that are right for you.