Are You Sabotaging Your Retirement?
If you’re like many Americans, you may be inadvertently sabotaging your retirement despite your best intentions.
You may be putting your future’s financial security at risk by:
- Not saving enough. It’s never too late to start saving for your future. Whether by cutting expenses, downsizing, or finding ways to boost income, extra dollars set aside today translate into significant savings for your later years. If you are saving some money now, commit to increasing your contribution and exploring options for saving more.
- Not having a retirement plan. A plan defines your current financial status and your future goals, and outlines specific steps to bridge the gap between the two. Annual reviews ensure that you are on track by enabling you to adjust your investments according to your changing needs and fluctuating markets. It is difficult to ascertain how much you will actually need and whether you are reaching that goal without a workable plan that takes into account anticipated future expenses and income from other sources (social security, etc.). You may also be missing out on smart investments by being either too aggressive or overly conservative. And a carefully-designed plan protects you from unnecessary tax consequences and excess fees.
- Taking funds out of your retirement account. It may be tempting to borrow from your own account. But doing so subjects you to harsh penalties and taxes. And it robs you of significant future earning potential vital for retirement security. Even if you plan to pay yourself back, you lose valuable time to earn tax-free savings for your future. Withdrawing funds during market downturns may be also seem wise. But since a solid plan takes into account such shifts, doing so prevents you from benefiting when the markets recover and resume their growth.
- Prioritizing college funds over retirement saving. No one will offer you a loan or a scholarship for your retirement. But they will for your kids’ education. And your children have many more years than you do to pay off student loans. Most parents also dread the thought of having to be depend on their children during retirement.
- Having too much debt. While taking on debt for a home mortgage offers valuable tax and other benefits, credit card debt can be harmful. Start by paying off cards with the highest interest rates and limit excess spending. The more you lower those costs, the more you free up money to add to your retirement accounts.
- Not getting professional advice. With so much misinformation and reports of scams, it’s natural to be skeptical. But a trained and certified financial planner can help you understand your options and make wise decisions. He can help you develop a customized plan that protects your money while maximizing your nest egg’s earning potential. Ask your friends for referrals and investigate potential investment advisors’ backgrounds before hiring them. Verify their education and training, and check their FINRA certification.
- Failing to take a long-term approach. Building a solid portfolio takes time. Markets shift and returns fluctuate. Expecting immediate results or reacting too quickly to sudden drops sabotages long term goals. As long as you have a strategy in place and review your investments annually to balance them as necessary, you should not jump in and out of funds impulsively when sudden highs or lows occur.
Mismanagement and poor planning can lead to missed opportunities to secure a stable future. By avoiding common mistakes, your path to retirement will be smoother and most likely to provide you comfort and stability in your later years.
At Silverman Financial, we are eager to help you prepare for a stable financial future. We offer expertise in designing retirement plans that incorporate your needs, goals and wishes.
