More and more Americans are worried about their retirement, and many make the same mistakes that can be avoided with proper planning.
To address these concerns, below you can find the main mistakes to avoid when saving for retirement.
1. Start saving too late
Many people think they should pay off their debts first, and then they need to save for a new house and then save for the retirement. However, if you start too late, it can be almost impossible to catch up.
2. Retiring with debts
More people are entering retirement wit debt and mortgages. According to the study published by AARP, people older than 75 are taking more debt. However, you should try to pay off your debts before the retirement.
3. Relying on Social Security
Many people expect Social Security benefits to cover their retirement completely. However, it is risky to have only one source of income – you need to have several ones for the safe retirement.
4. Lack of diversification
When you are younger you can take more risks than when you have several years left before the retirement. Don’t invest more than 10% in one stock or investment.
5. Not taking advantage of your 401(k)
Some companies offer to match a proportion of the 401(k) contribution. Put simply, it is free money that you should not leave on the table.
6. Not knowing retirement options
If you are going to max your 401(k) contributions, you should also think about Roth IRA. It is a retirement account that allows you to set aside money after taxes.
7. Don’t time the market
Many people just jump out of an investment when they think there is a trouble. However, you should not panic. If you pull the money out at the first signs of troubles, you could take a toll on your portfolio.
8. Saving for children’s college before saving for the retirement
Don’t put away money for your kid’s college fund if it stops you from saving for your retirement. Retirement should be a priority because children can borrow for college but you cannot go to the bank at the age of 75 and say you need money for medicine.
9. Not planning for healthcare expenses
Sometimes, the costs of medical care during your retirement can be so large that even good insurance cannot cover all your costs. Quite often people buy insurance that covers a certain amount of money a day in care, but the average cost for a room in a nursing home is so high that it is not enough.
10. Not having a clear distribution strategy
Planning for your retirement means more than just pulling money out of different forms of savings. You should have a distribution strategy in order to decide on the best way to use your funds.
So, What’s Your Next Step…
At Calvert Investment Counsel, we have necessary financial tools and strategies that will give you the retirement plan you need to be confident in your future. Give us a call today at 410-435-3270 or click here to inquire online.