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5 of the Most Common Retirement Mistakes People Make

  • July 16, 2020

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5 of the Most Common Retirement Mistakes People Make

It’s never too early to think about your retirement plans. Even people right out of college should think about how their money choices, saving decisions, and career paths affect their retirement goals. That said, it’s easy for people to fall into traps when it comes to saving for retirement and deciding on plans. To provide some more direction, we’ve listed some of the common retirement mistakes people make, from taking out money too soon to not saving soon enough. We hope that what you see here will provide you with the advice you need for a successful future. Take a look!

Not Saving Soon Enough

This is probably the biggest mistake people make when it comes to retirement. This is something you should think about throughout your adult life. The sooner you start saving, the better. Thanks to compound interest, every dollar you save will continue to grow until you retire—so why wouldn’t you want to save early?

Quitting Your Job

Changing jobs throughout adulthood is completely normal. In fact, the average worker changes jobs a dozen times in their careers, so don’t fret about that. What you should think about when it comes to quitting jobs is the money you’re leaving on the table. For example, if you signed up for their 401(k) plan, profit sharing, or different stock options, then you may not even really own that money yet. This has to do with vesting, which basically means you don’t have full ownership of the funds until you’ve been employed for a set period (sometimes around five years).

Before you leave a job, make sure to look into what your vesting situation is. Is leaving the job worth leaving those funds on the table?

Not Doing Your Research on Plans

There are quite a few different retirement plans out there, so make sure to do your research on what will work best for you. For example, you can look into whether a retirement annuity is the best fit for you. Doing your research on these plans before actually investing in them will help you be surer of what you’re saving, where the money is going, and when you can take out the money. The more research you do, the better. If you don’t research, you run the risk of losing money, not having enough money, or simply being unsatisfied with the plan you’ve chosen.

Increasing Debt

Of course, nobody likes debt. We understand that! But the problem that can occur as your kids grow and as life goes on is the issue of driving up debt. It’s not only about saving for retirement, but also about building an emergency fund so that you don’t end up increasing your debt for the future. It may seem hard, but try your best to keep saving and to pay off debt. It’ll make for a much easier retirement!

Failing to Account for Health Costs

Another incredibly common retirement mistake people make is not accounting for health costs. Things come up. Hospital visits occur and unexpected events happen, and if you don’t account for that, you put yourself in a tough position. More of your retirement money will go to health costs than you might think. Keep this in mind when it comes to your spending once your retirement hits.