Pursuing your retirement dreams is challenging enough without making some common, and very avoidable, mistakes. Run through this retirement checklist of the eight big mistakes to steer clear of.
1. No Strategy 🚫
Yes, the biggest mistake you could make is having no strategy at all. Without a strategy, you may have no goals, leaving you no way of knowing how you’ll get to retirement!
Creating a strategy may increase your potential for success, both before and after retirement. Trust us, retirement is worth being intentional about. We don't want you working until 100.
2. Frequent Trading
Chasing “hot” investments often leads to disappointment. Our investment team recommends creating an asset allocation strategy that is diversified to reflect your objectives, risk tolerance, and time horizon. Then, you can make adjustments based on changes in your personal situation, not due to market ups and downs. For more information on "hot" investing, check out our blog on alternative investments.
3. Not Maximizing Tax-Deferred or Employer Sponsored Savings
Workers have tax-advantaged ways to save for retirement, like using a Roth 401(k).
Not participating in your employer’s 401(k) may be a BIG mistake, especially when you’re passing up free money in the form of employer-matching contributions. This is an item of your retirement checklist that you don't want to postpone. Every pay period is potential money you're missing out on! Let us demonstrate:
Hypothetically Speaking: Let's say your employer matches 5% and you make $5,000 per month, paid biweekly.
If you contribute 5% of your gross paycheck to your company sponsored 401(k), you will allocate $125 from each paycheck toward your retirement account.
Since your employer matches the 5% you put in, they will also contribute $125 each paycheck.
With your contributions + your employers contributions, you will be saving $250 per paycheck toward your retirement!
Don't leave your employer match hanging out to dry. That's free money! And you can only access it if you're contributing. That's why it's called a "match."
Not to mention, if your company offers a Roth option that's even more savings in retirement since that account is tax deferred. Hence, you pay taxes up front (on the contribution) and you won't have to pay taxes on the large sum you withdrawal at retirement (after the investment has grown over so many years).
Are you working on your taxes now? Check out our Quick Reference Guide that discusses 2024 tax brackets and deadlines.
4. Prioritizing College Funding Over Retirement
Your kids’ college education is important, but you may not want to sacrifice your retirement for it. Remember, you can get loans and grants for college, but you can’t for your retirement.
When weighing your options, it's a good idea to prioritize your retirement first since these funds can compound annually over time, growing in your sleep. That's why so many experts stress the importance of starting early!
5. Overlooking Healthcare Costs
Extended care may be an expense that can undermine your financial strategy for retirement if you don’t prepare for it. Remember, when you near retirement you should expect your medical costs to increase as our health typically declines when we're older. It's not fun to think about, but planning for these expenses will keep you and your family financially safe.
6. Not Adjusting Your Investment Approach Well Before Retirement
Your retirement checklist should have several opportunities to adjust your investment approach as you move through different stages of life. The last thing your retirement portfolio can afford is a sharp fall in stock prices and a sustained bear market at the moment you’re ready to stop working. No thank you!
Consider adjusting your asset allocation in advance of tapping your savings so you’re not selling stocks when prices are depressed.
7. Retiring With Too Much Debt
If too much debt is bad when you’re making money, it can be deadly when you’re living in retirement. Consider managing or reducing your debt level before you retire. Imagine how much piece of mind you would have going into retirement debt free. 😌🌈
8. It's Not All About Money
Above all, a rewarding retirement requires good health. It's wise to maintain a healthy diet, exercise regularly, stay socially involved and challenge yourself intellectually. And please, don't fall for the latest scams. You've got this! ❤️
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Disclosures
This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.
Mutual funds are sold by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.
Alternative investments are not without their risks. They often have higher fees, which can reduce total returns. They are also complicated and less transparent investments. Alternative investments are less liquid assets and may not serve to reduce risk in extreme down markets.
This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed.
Investment advisory services offered through PFG Advisors, LLC, a SEC registered investment adviser. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Insurance products offered through approved carriers. Copper State Credit Union, PFG Advisors, LLC, and Osaic Wealth, Inc. are separately owned entities and are not affiliated companies.
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