More and more nowadays it's always about saving money for retirement. Employers always push employees to save and you always hear about investing, 401k's, IRAs and annuities. While preparing for that big day, there are a lot of common mistakes that people still do that can actually prevent you from retiring when you want to. Avoiding these common mistakes will help you keep on track and possibly get there sooner.
Not maximizing your 401k company matches
Companies can match your 401k contributions but every company is different and they have different matching programs. It's important to know what their limits are and try to get the most out of it. Some will match dollar for dollar up to a certain percent of your salary. This can all add up to $1000s being left on the table annually.
Relying too much on your company's auto-enrollment into a 401k
While this is definitely the right way of thinking, getting employees to think about saving for retirement, it may still not be enough. Most auto-enrolled programs start off anywhere between 3% to 6%. Financial experts always try to push for stashing away 10% to 15% of your annual income.
Not knowing how much you pay in fees
Almost all retirement plans incur maintenance fees or transaction fees, depending on the type of investment. Through the years all of these add up as well. It's good to know how much you're paying because while an investment looks good, the higher fees can minimize that investment and you're better off investing somewhere else.
Retiring too early
Social Security comes to mind with this common pitfall but can apply to all of your investments. Depending on how old you are, different scenarios can happen. If you retire before 59 1/2, you could get hit with early withdrawal tax penalties on IRAs and 401ks. The earlier you retire, the longer you have to make your money stretch as well. Social security will usually pay out more the longer you wait on pulling out of it.
Just hoping that you've saved enough
You have to come up with a retirement plan, and it's as simple as that. If you don't know how much you'll need for retirement, there is no way you can know if you're saving enough. By the time you realize it's not enough, it will most likely be too late.
Everyone's situation is different and it can be tough to figure out what numbers you need to hit. It's best to seek advice from a certified financial adviser to help with your specific needs. NAC members get to speak to financial advisors to assess their situation and use financial tools available for planning. Find out more what NAC can do for you by joining today!
The Five Biggest Retirement Planning Mistakes You Can Avoid
More and more nowadays it's always about saving money for retirement. Employers always push employees to save and you always hear about investing, 401k's, IRAs and annuities. While preparing for that big day, there are a lot of common mistakes that people still do that can actually prevent you from retiring when you want to. Avoiding these common mistakes will help you keep on track and possibly get there sooner.
Not maximizing your 401k company matches
Companies can match your 401k contributions but every company is different and they have different matching programs. It's important to know what their limits are and try to get the most out of it. Some will match dollar for dollar up to a certain percent of your salary. This can all add up to $1000s being left on the table annually.
Relying too much on your company's auto-enrollment into a 401k
While this is definitely the right way of thinking, getting employees to think about saving for retirement, it may still not be enough. Most auto-enrolled programs start off anywhere between 3% to 6%. Financial experts always try to push for stashing away 10% to 15% of your annual income.
Not knowing how much you pay in fees
Almost all retirement plans incur maintenance fees or transaction fees, depending on the type of investment. Through the years all of these add up as well. It's good to know how much you're paying because while an investment looks good, the higher fees can minimize that investment and you're better off investing somewhere else.
Retiring too early
Social Security comes to mind with this common pitfall but can apply to all of your investments. Depending on how old you are, different scenarios can happen. If you retire before 59 1/2, you could get hit with early withdrawal tax penalties on IRAs and 401ks. The earlier you retire, the longer you have to make your money stretch as well. Social security will usually pay out more the longer you wait on pulling out of it.
Just hoping that you've saved enough
You have to come up with a retirement plan, and it's as simple as that. If you don't know how much you'll need for retirement, there is no way you can know if you're saving enough. By the time you realize it's not enough, it will most likely be too late.
Everyone's situation is different and it can be tough to figure out what numbers you need to hit. It's best to seek advice from a certified financial adviser to help with your specific needs. NAC members get to speak to financial advisors to assess their situation and use financial tools available for planning. Find out more what NAC can do for you by joining today!
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