How to Avoid Mistakes With Retirement Planning
Retirement planning is one of the most important financial goals you’ll undertake – and the stakes couldn’t be higher.
Do it right and your golden years can be filled with independence, comfort, and freedom.
Retirement Planning Mistake 1: No Plan
According to the Retirement Confidence Survey from the Employee Benefits Research Institute, 48% of workers haven't calculated how much money they need to save for retirement.
Similar studies show that when workers calculate their retirement savings needs and set a goal, they materially improve the actions taken to achieve that goal.
Stated simply, you can't go to where you want to go if you don't know where you're going. You must set the goal and then design a plan to achieve it.
Failing to plan is the same thing as planning to fail. The sad truth is most people spend more time planning their vacation than their financial future. You must be different.
Retirement Planning Mistake 2: Don’t Save Enough
Here’s a shocking set of statistics for you:
- According to the Federal Reserve, the median balance of retirement savings for Americans is $60,000.
- The median retirement savings balance for those aged 35-44 is $42,700.
- The median retirement savings balance in the 55-64 age category (people near retirement) is $103,000.
Here’s the reality: you’re either saving for retirement today, or you're consuming your retirement today.
Retirement Planning Mistake 3: Don’t Start Saving Early Enough
There’s only one guarantee in retirement planning: doing nothing won’t provide financial security.
Many people mistakenly believe they’ll have plenty of time for retirement planning once they buy a home, put children through college, and so on. That’s a mistake because when you’re 20 years old, you think retirement is 40 years off, so you wait until you’re 30.
When you reach 30, you have a mortgage and kids and spend money like crazy, so you wait until 40. When you’re 40, the kids are in college, or your parents need help, so you wait until 50.
The most valuable asset you have when saving for retirement is time.