9 Retirement Planning Mistakes to Avoid
When it comes to planning for retirement, avoiding common mistakes can be just as important as making smart decisions. Financial experts often emphasize this approach, understanding that a solid plan can lead to a more secure future. At Falcon Wealth Planning, we believe that by steering clear of these pitfalls, you can set yourself up for a successful retirement.
1. Not Having a Plan
Retirement doesn’t just happen on its own. To ensure you’re financially secure, you need a well-thought-out plan. This plan should address questions like:
How much can I save each year?
Am I using all available saving opportunities, like a workplace retirement plan or an IRA?
Where should I invest my money to make it grow?
Could I be saving more?
Working with a financial advisor, especially one who acts in your best interest (a fiduciary), can help you craft a plan that fits your unique needs and goals.
2. Ignoring Tax Benefits
The government offers several tax-advantaged accounts like 401(k)s, IRAs, and 403(b) plans that help you grow your retirement savings faster by deferring taxes. Some of these accounts even provide tax deductions now. Taking advantage of these options can significantly boost your savings over time.
3. Missing Out on Employer Matches
Many employers offer to match a portion of what you contribute to your retirement account. This is essentially free money, and not taking full advantage of it is a missed opportunity. Make sure you contribute enough to get the full employer match, as it’s one of the easiest ways to grow your retirement fund.
4. Not Saving Enough
Contributing the minimum amount to get an employer match is just the start. To truly secure your retirement, you need to save more. The earlier you start saving, the better off you’ll be. If you wait until later in life, you’ll need to save a higher percentage of your income to catch up.
5. Overlooking Inflation
Inflation can erode the purchasing power of your savings over time, meaning what you save today might not go as far in the future. To combat this, it’s important to invest in assets that have the potential to outpace inflation, like stocks, rather than keeping all your money in low-yield savings accounts.
6. Being Too Conservative with Investments
If you’re far from retirement, it’s important to invest in assets that offer higher returns, like stocks. While stocks can be volatile, they have historically provided better long-term returns than more conservative investments. A diversified portfolio that includes stocks can help you build wealth over time.
7. Paying High Fees
High fees on investments can eat away at your savings. Even a seemingly small fee can add up to tens of thousands of dollars over time. Look for low-cost investment options, like index funds, which typically have lower fees and can help you keep more of your money working for you.
8. Taking Too Much Risk Near Retirement
As you approach retirement, it’s wise to shift your investments into more conservative options. This helps protect your savings from market downturns that could occur just when you need the money. However, it’s still a good idea to keep some money in stocks, as retirement can last for decades.
9. Accumulating Too Much Debt
Carrying too much debt into retirement can be a major burden. High debt payments can make it difficult to save and can reduce your retirement income. It’s best to pay off as much debt as possible before retiring so you can enjoy your retirement years without financial stress.
Bottom Line: Get a Free Financial Assessment
Avoiding these nine common mistakes can help you build a more secure financial future. At Falcon Wealth Planning, we’re here to help you navigate the complexities of retirement planning. Contact us for a free financial assessment and let us help you create a plan that avoids these pitfalls.
*The content in this blog is for general informational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Falcon Wealth Planning, Inc., a fee-only, true fiduciary, registered investment advisor, provides this information to give a broad understanding of financial concepts and strategies.