5 Common Retirement Mistakes To Avoid Making

Retirement planning is one of the most important investments you will make in your lifetime. It is essential to be well-informed and understand the various retirement options available so that you can make the best possible decisions for your situation. Unfortunately, many people make mistakes when it comes to retirement planning that can have serious long-term consequences. Here, we’ll look at five of the most common retirement mistakes, how to avoid making them, and what you can do to better prepare for your golden years.

Forgetting About Employer Benefits

Many employers offer 401(k) plans or other retirement accounts and will match employee contributions to them. Missing out on these benefits can mean missing out on potentially thousands of dollars in free money over time. Make sure to research your employer’s offerings and take advantage of them if they are available.

Not Saving Enough

You can begin saving for retirement as early as you’d like to give compound interest enough time to work its magic and maximize your savings potential. Too often, individuals wait to begin saving until late in life, only to realize they haven’t saved nearly enough to live comfortably during retirement. Even small contributions to a retirement account such as a Roth IRA can add up over time. Start saving early and reap the benefits as you enter this phase of your life.

Not Planning Ahead for Long-Term Care Costs

Another common retirement mistake to avoid making is to forget about long-term care costs. These expenses can be exorbitant, easily overwhelming your savings in many cases. Because of this, it’s beneficial to consider purchasing long-term care insurance or setting aside funds for future long-term care costs if you are able.

Investing Too Aggressively

When it comes to investing for retirement, it is important not to get too aggressive with your portfolio allocation. Although more aggressive investments may have higher returns over short periods of time, they also come with higher risks, which could lead to large losses if markets decline. As such, talk with your investment broker about finding a balance. Generally, it’s best to develop an appropriate asset allocation strategy that accounts for risk tolerance and investment objectives.

Withdrawing Money Early

Additionally, make sure you aren’t pulling money out of your retirement accounts too soon. Doing so can lead to penalties, taxes, or even the depletion of funds before you need them. As a result, you may find yourself with an account balance much lower than expected come the time of your official retirement. Withdrawing money early could also reduce Social Security benefits since your income is a large contributing factor. To avoid this mistake, carefully consider all sources of income when making plans for how much money you will need during retirement.

Retirement planning is no easy feat, but taking the time and effort to assess your finances now will pay off exponentially later. At Vancouver Wills & Trusts, it’s important to us that our clients feel secure in their retirement. As an experienced wills and trust attorney, Nicholas Alexander works hard to cater to your needs and will ensure everything is in proper order for your later years. From wills to trusts to estate planning, we have you covered.