3 Retirement Savings Mistakes To Avoid
Saving for a big purchase or vacation is fun for most people. However, this same feeling of excitement is not felt when putting money away for retirement. Unfortunately, without saving properly, you could end up in enormous financial stress, but help is available. This guide will help you understand a few common retirement savings mistakes to avoid.
Not Saving Anything
One of the most common mistakes people make is not saving anything at all for their retirement. The reason many people choose not to save for their retirement is different for everyone.
Some people believe they will not live to see their retirement years. Or, they may think their social security will be sufficient for their needs during retirement. No matter what the reason, not saving for retirement can be risky.
It is never too late to start saving for your retirement. Consider working with a financial advisor to get your savings started now.
Not Saving Enough
Another mistake is saving, but not saving enough for retirement. For example, you may put the bare minimum into your 401k account or IRA, thinking a little is better than nothing. This is true, but if you have the financial means to do so, you need to contribute as much as possible into your retirement accounts.
Of course, you may not realize how much you will even need during your retirement years. Not only will you need money for basic living expenses, but you should also factor in savings for taxes, insurance, and medical care. Fortunately, there are many online calculators and programs that can help you determine an amount that would be suitable for your specific needs.
Cashing Out
Finally, many people who do save for retirement make the mistake of cashing out their accounts instead of rolling them over into a new account. This is most common when leaving a job, for instance.
You may think cashing the funds out of your retirement account and moving them into a savings account is best, but there are more suitable and more affordable options to consider.
If you are leaving a job and have a retirement account through your employer, rolling the account over into a new 401k or even an IRA is best to avoid costly fees and tax penalties.
Help is available if you are new or unsure about your retirement savings. With this guide, you will be able to avoid the most common retirement savings mistakes. A company like Pralana Consulting LLC can provide even more tips and explanations for you.