5 Retirement Savings Mistakes to Avoid
Saving for retirement is one of the most important financial practices that you can and should be doing on a regular basis. This article covers the 5 most common mistakes that people make when planning their retirement savings.
Are you saving for retirement? Putting money aside for your retirement is a good idea but we often make mistakes that are costing us. Here are some of the common mistakes you may be making in regards to your money and retirement savings.
Your Investments
You may be investing too aggressively with your investments and losing money. It’s not a good idea to have everything in stocks as this may crash in the future with our unpredictable stock market. The Money you make today may be wiped out tomorrow. On the other hand you may not be taking enough risk with your stocks and not making the money you could be making with investments. Try to have several safe investments and a couple you can play around with to make extra money. Don’t invest anything that you can’t afford to lose. So weight your risk and invest accordingly and don’t put everything in one basket investment wise.
Have a Retirement Budget
You haven’t worked out a retirement budget to judge your needs in the future. You may outlive the amount of money you have now because people are living longer. You should make up a budget long before you retire so you see exactly where your money is going. You can then take the extra income you have and put it into your retirement savings. You want to be able to have enough income when you retire so start the planning early.
Inflation
You are saving but not taking into account the inflation. Try to use a percentage like 3 to 4% when figuring out inflation. The money you need to live on today is going to be more tomorrow. Inflation is something you need to think of and plan for or you’ll be left without enough income coming in. Your budget today is going to change in the future so have a plan to adjust things accordingly and watch the current trends.
Life Expectancy
In today’s western world the average man lives to 75 and a woman lives to 80. This is just average and you may live well beyond that. If you haven’t planned for the fact that you could live a long time you’ll find your savings are drained when you get older. Make sure you plan for the fact that you may live a good long time as life expectancy may go up even further in our future.
Relying Too Much on Social Security
Don’t rely on Social security as this just wasn’t what it once was. This is going to diminish in the future and it’s not a good plan to depend on this. Benefits may be cut in the future so don’t plan on this being able to help you. For those planning to retire in the future this should be removed from your plans completely or at least partially. It’s important to look to other forms of retirement and not just Social Security. Take your benefits at a later age it get the maximum return if you are near retirement.
