28.6% of baby boomers have begun to retire worldwide, but before they could retire, they had to plan years ago for this precise moment. If you’re not quite ready to retire it’s essential that you begin preparing for it.
We’ve created a comprehensive guide that will fill you in on common retirement planning mistakes people make that you should avoid.
1. Having No Plan
Some people think that you’ll wake up one day and retire without having a plan. When you don’t plan for retirement, you leave yourself without the funds necessary to retire.
At the beginning of your career take time to create a plan that lays out your current needs as well as how much you intend to save. By doing this you’ll ensure you’ve set aside the proper amount of funds for each pay period to secure your future retirement.
With that in mind, what is a good monthly retirement income to have? Generally speaking, experts suggest you save enough to cover around 80% of your pre-retirement monthly income. So, right there, you’ve got the start of your plan. Look at how much you earn each month, then work out how much you need to save to provide 80% of this when you retire. It can be tough to figure out, so feel free to speak to a financial advisor for more help.
2. Not Taking Advantage of Retirement Accounts
There are several retirement accounts that you have access to, you’ve simply got to look for them. For example, some IRA accounts allow you to use them as tax deductions.
This means that the money in these accounts will continue to grow and lower the amount of taxes you’ve got to pay in the process. The more you contribute to your IRA the better off you’ll be when it’s time to retire.
If you’re still unsure about IRA accounts, we recommend speaking with an IRA custodian to get more information and insight into ways this type of account will benefit you in the long run.
3. Failure to Diversify Your Portfolio
The number of people investing is rising and will continue to do so as people look for ways to diversify their retirement portfolios. It’s important as you save for retirement you find different ways to invest your funds.
Before you begin to invest you need to think about what you’re willing to risk losing in the process. You also need to consider what your goals are when it comes to investing.
There are several ways to invest including:
- Cash equivalents to bonds
These are just a few investments you’re able to make. You shouldn’t place all of your investments in one area because if it doesn’t work out, you’re in the red instead of the green.
Investment diversification gives you a fallback plan in case another area of your portfolio isn’t doing as well as you would like it to.
4. Not Rolling Funds Over
Did you leave one job for another? Congratulations, but now you’ve got to decide what to do with the funds in your retirement account from your previous job.
Some people take the money in the form of a lump sum and spend it. We recommend you think twice about withdrawing the funds instead of saving them.
Retirement Planning: Mistakes You Don’t Want to Make
When it comes to retirement planning there are several things you need to do and even more you shouldn’t. Not having a plan sets you up for failure and you should find ways to diversify your portfolio.
We hope you found the information you were looking for above. And if you’ve got some time to hesitate to scroll through some of our other blogs.