One of the secrets about building a retirement strategy that will help you reach your goals in retirement is avoiding common mistakes. It can be difficult because there are a lot of them. But avoiding those mistakes will help you feel confident that your finances will see you through your retirement and potentially even leave a legacy for your heirs.
One of the very first things you can do to avoid common retirement mistakes is to start saving right now. Every dollar you save today continues to potentially grow until you retire. As much as possible, cut back your spending a bit and put that money into your savings, because the payoff when you retire could be considerable.
Another mistake is not documenting your strategy to achieve your goals. A strong and wide-ranging financial strategy that factors your life expectancy, planned retirement age, where you’d like to live, your general health and your preferred retirement lifestyle can keep you focused and on track to the kind of retirement you truly aspire to.1
Just simply working can help you avoid another mistake: quitting your job too early. Many people leave a job without realizing they’re walking away from money in the form of employer contributions to their 401(k), profit-sharing, or stock options. And speaking of those contributions, you may want to consider maxing out your company match. If your employer offers a 401(k), sign up as soon as possible and make sure you’re maximizing the amount of money you contribute because that will allow you to enjoy a full employer match if one’s offered.
If your employer doesn’t provide a 401(k), consider a traditional or Roth IRA.
The next common retirement strategy mistake is investing unwisely, some people are comfortable with a self-directed investing approach because of the flexibility of choices it provides them.
Self-directed investing isn’t necessarily a bad thing, as long as you have the willpower to avoid biting on those “can’t-miss” stock tips that, in reality, might be pretty risky.1
As you get further into your journey toward retirement, it can be easy to fall into the trap of not rebalancing your portfolio. It can be a good idea to look at your portfolio on an annual or quarterly basis to make sure your asset mix is still performing.1 And, when we’re faced with the kind of economy we are right now, having someone to keep a keen eye on your portfolio is even more important.
And, the closer you are to that date when you can push away from your desk and call it a career, the more important it may become to review your portfolio allocation. Of course, that all depends on your unique journey to retirement.
Working with a financial service professional can potentially help you identify and avoid mistakes on unique to your journey to retirement.