Retirement Planning and Saving: Mistakes to Avoid

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.