We all make mistakes in our lives. However as we near retirement age, we really want to be cognizant of the mistakes that can affect us during retirement. There are many mistakes we can make. This post is focusing on the five big retirement mistakes that many people about to retire make.
We are assuming that you have the rest of your life in order. We will just focus on the preparation for retirement. Company downsizing, health issues and accidents can also have huge impacts on people during retirement or while you are working. Let’s focus on some of the things that we have control over and not on those that we do not have control over.
Five Big Retirement Mistakes
Leaving money on the table that may be offered to us in a variety of ways. For example dividend reinvestment plans where your company matches contributions to the plan, either as part of your retirement plan or a company savings plan is a good example. Always take advantage of these offers to augment your savings. Another example is leaving a company too soon and not being able to take your retirement plan with you. This is your money and you need to make sure that your money comes with you or gets locked in by a 3rd party. Anytime you leave money on the table, you impact your overall financial situation.
Not saving enough money for retirement is another big mistake. Most people do not even know how much money they will need. The right thing to do is to meet with a financial adviser and work with them to calculate just how much money you will need. The simple way and not too accurate is to make your own calculations. If you make $50,000 today and want to have the same amount in retirement, you will need to have $1.0 million that generates 5% income every year to sustain your retirement. We happen to believe you need less than that, but that is a much more complex calculation.
Saving on auto pilot is a great way to make sure you have saved some money for retirement, but most people do not follow this approach. All you need to do is have your bank or financial company deduct from your account a fixed amount every month and place it in a savings account, financial investment etc. It is a form of savings and it is a start towards saving for retirement.
Paying high fees for banking services, for financial advisers, for trades on investments etc. Anytime you can reduce these fees means more money in your account. With compounding over the years these fees can add up and make a real difference in your retirement.
Retire too early before you have saved enough to last your remaining life time. Follow the first step and find out how much you need to save for retirement. Once you reach that objective you will know that you can safely retire and know you have enough for retirement.
These Five Big Retirement Mistakes can make a huge difference in your lifestyle during retirement.