Just investing in a retirement plan does not guarantee that you will be financially secure at your retirement. One mistake in planning for your retirement could land a baby boomer in a heap of trouble and push your retirement back by years. To make sure that you are in the perfect position to retire when you want to, and on your own terms, diligent planning is as essential as is avoiding the most common pre-retirement planning mistakes that baby boomers make. If you make these common retirement planning mistakes, you may be heading for trouble.
- Don’t forget to take complete advantage of your company retirement benefits, and invest as much as you can afford into your company retirement plan.
- Don’t withdraw money from your retirement plan or you will lose valuable interest which is almost impossible to replace. Some retirement plans do allow hardship withdrawals and loans, but find out about the loss of interest, penalties and early withdrawal fees that may be involved.
- Don’t forget to actively monitor all your investments, to keep yourself aware of discrepancies and know how well your investments are performing.
- Don’t rely solely on Social Security to provide your entire retirement income. Back it up with other means of income such as a company pension plan and personal savings.
- Don’t rely on your partner’s retirement plan. The partner with the retirement plan may die or divorce or have an extended illness that would end up compromising on the single spouse retirement plans. Make sure each person has a separate retirement plan.
- Don’t forget to review your retirement plan on a regular basis. Review asset allocation, balances, goals, etc to make the most of your retirement plan.
- Don’t put all your investments in one stock. Diversify investments so that one failure does not wipe out your entire retirement fund.
- Carefully check out your broker and your financial advisor before you trust your retirement savings to them. Research credentials and track records.
- Don’t forget to take retirement planning seriously. Your retirement plan should be a priority even when you are young and at the beginning of your career. Starting early allows you to stash away a large investment and might even enable you to retire early. Think about the life style you want after retirement, and don’t postpone planning until after all your current commitments are paid for.
- Don’t forget to figure out the numbers. There is no set formula to determine how much money you will need. The amount depends on the lifestyle you want, your current capability to save, and your investments. Roughly, to generate an income of $50,000 per year during your retirement, it is necessary to accumulate $1 million in the fund.
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