Retirement Planning and Saving: Mistakes to Avoid
Here’s a list of common mistakes and miscalculations on the road to financial security:
Saving too little
- The amount you should save depends on multiple factors:
- How many years until you retire?
- The types of expenses you foresee in retirement
- How much you already have in savings and pensions?
- The impact of inflation on your future buying power
- The simplest approach is to put 10 to 20 percent of your income each year toward your retirement.
- Regular, automatic savings programs also help make it “painless” to set money aside.
Starting too late
- The sooner you begin saving the faster you can develop a solid retirement fund through the magic of compound interest.
Not diversifying enough
- A mix of savings and investments that might perform reasonably well under any economic or market conditions.
- Not diversifying can be a problem if the approach you take doesn’t perform well or actually loses money.
Not doing your homework
- A wrong move can cost you thousands of dollars in taxes, fees, penalties or bad investments.
- Some tips for starting your homework would be:
- Find free resources from at the library, your employer’s personnel department or government agencies.
- Talk to financial professionals you know and trust.
- Ask for a clear explanation of the pros, cons and costs of what they recommend.
- Do some comparison shopping before you make a final decision.
- Don’t forget to check your savings and investments regularly.
Falling for retirement rip-off
- If contacted by someone peddling financial products with features that seem too good to be true, trust your instincts.
- There are many scams designed to trick consumers into giving up cash, checks, credit card numbers or other valuables for little or nothing in return.
- Common cons involve promising fantastic returns on investments that turn out to be fraud.
From FDC 2018 summer newsletter, 25 Years of Tips You Can Bank On.