Your retirement is supposed to be your safe haven.
The rest at the end of your stressful career shouldn’t be compromised by hidden dangers.
Most investment companies, and even your employer, don’t want you to know the retirement mistakes you’re making.
Each penny you lose from your retirement fund goes into their pockets.
Stop funding everyone else with your retirement savings. Let me tell you the retirement mistakes you’re making that sabotage your savings.
While your retirement savings are your responsibility, there are helping hands along the way meant to boost your fund.
One of the most common is an employer-provided investment account, often a 401(k).
Those accounts usually have a contribution match in place.
It may not be thoroughly explained to you, and therefore you might not know to take full advantage of it.
It’s when your employer pays into your retirement account simply because you do too.
Other hidden help exists, but your employer and investors don’t want you to know about them because then they have to dive into their pockets.
They would rather you spend retirement broke and destitute than explain all the ways your retirement savings could be helped before you reach your final years in the workplace.
It’s time for that to end.
There are enough hurdles and obstacles on your way to make your road to retirement sufficiently difficult. You don’t need your employer or account provider blindfolding you in the process.
Let me help you avoid these deadly retirement mistakes in the years leading up to when you finally call it a day.
1. Quitting Your Job
What you may not know is your employer can withhold some of your retirement money if you leave your job (even if it’s years before you retire!)
Through a technique called vesting, you could be leaving behind substantial cash each time you switch jobs.
Save what you have already built by making sure each time you leave, you’re not getting stuck with partial ownership of your retirement funds.
Often the workaround is staying at your job for at least 5 years.
Then you can (usually) secure entire ownership of your account.
2. Not Saving Immediately
Even if you’re decades away from retirement, it’s never too early to start saving.
In fact, if you’re reading this, begin saving RIGHT NOW.
On behalf of compound interest, you make the most money by contributing as early as possible.
If all you can afford is $100 a month, start there. Up your contributions as you’re able, but you make yourself a ton of cash by starting immediately.
3. Not Having a Financial Plan
As dismal as it may sound, you should map out how you plan to spend your money during retirement.
That includes factoring in your expected lifespan, planned retirement age, location, health, and lifestyle.
All of these things influence how much money you need to have saved before you stop working.
If you don’t plan accordingly, you could end up running out of money.
4. Not Maxing Out Contribution Match
As I mentioned earlier, your employer might offer a contribution match.
This is a gold mine if you take advantage of it properly.
Even if you can’t allot a ton of money to savings each month, at the very least meet the required minimum to earn the company match.
It’s free money you’re throwing away if not.
5. Investing Unwisely
Ensure your money is going towards smart investment decisions.
You don’t have to hand pick each security your account invests in – in fact you may not be able to – but you should be cognizant of unreliable picks.
Don’t trust information from unverified sources, and don’t trust your savings to highly volatile movers like Bitcoin (Bitcoin has its time and place – retirement isn’t it).
6. Not Rebalancing
You should make an effort to take a peek into the securities your account is investing in every once in a while.
You know the saying ‘a watched pot never boils,’ and you shouldn’t hawk-eye your retirement account all the time.
But you should reconsider where your money is going at regular intervals during market movements.
Either annually or quarterly, you should give your securities a once-over.
As you get closer to retirement, your assessment should focus on reducing risky investments and increasing your holdings in ‘safe havens’ like bonds.
Unnecessary risk in the final years before retirement can do more harm than good.
7. Not Planning for Taxes
When discussing what kind of investment retirement account (IRA) to choose, often the decision comes down to taxation.
Traditional IRAs and Roth IRAs differ in that the former is tax-free upon contributions but taxed upon withdrawal. Roth IRAs are the opposite.
The choice comes down to whether you think you’ll pay more in taxes now or later. That influences what kind of account you have.
If you plan poorly for your increased/decreased tax bracket upon retirement, you could end up paying a lot more to Uncle Sam than you previously thought.
Sit down and do the math to ensure you have the right kind of IRA for your future tax purposes. You’ll save yourself tons of money in the end.
8. Draining Savings
If you cash out even part of your savings before age 59.5, your account holder chops off 20% of your entire balance.
Losing future earnings is also a possibility, seeing as you may not be able catch up to your previous balance before you took withdrawals.
The lesson here is waiting until your retirement date to use your retirement money.
Emergency funds should come from elsewhere.
9. Racking Up Debt
It should be common sense that owing money as you come into retirement isn’t a good thing.
Having an emergency fund to reduce your reliance on loans or taking from your retirement savings will preserve the money you have designated solely for retirement.
10. Not Planning for Unexpected Health Costs
This is pretty self-explanatory, but health costs can emerge at any time and in any amount.
Prepare for the event that your insurance won’t cover a health cost. The average couple will spend $285,000 in total on healthcare in retirement.
Staying healthy is one deterrent. Another is purchasing supplemental health insurance besides Medicare to cover the difference, or a health savings account (HSA).
11. Enrolling in Social Security Early
While it may feel juvenile, if you’re not old enough to draw your Social Security payments in full yet, DON’T.
For each year you take benefits early, you lose money you could have received.
They’ll allow you to file as early as age 62, but you won’t get 100% of your benefits until you’re 67.
It’s best to hold off until age 70 to get maximum retirement benefits.
I hope bringing these mistakes to light will help you protect your retirement savings, and boost them where possible.
As difficult as it is to make money for retirement, you can lose it in a split second.
Don’t jeopardize your retirement with these mistakes. Stay on course for a luxury retirement with these tips.