Avoiding Common Mistakes in Retirement Planning

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It’s not always easy to look far out into the future, especially for those who are still relatively young. No one wants to put themselves in the shoes of retirement, which often results in a lack of movement on the planning side of things. Retirement isn’t just going to unfold on its own, however; it takes quite a bit of work on the part of the individual. Planning for retirement may not seem pertinent to you, but the fact is that there is no such thing as being too young to get the wheels in motion.

Photo Credit via Flickr

Photo Credit via Flickr

An expert financial planner notes, “it takes proper retirement planning to ensure you’re comfortable for life after work.” More often than not, however, people tend to make mistakes during the initial stages of planning for retirement. Fortunately, some of these mistakes are so common that they’re relatively easy to avoid, especially if you know what to watch out for.

Don’t Opt Out of Employer-Sponsored Plans

One of the major benefits that comes with working for a stable company is that they typically offer retirement plans to employees. A big mistake made by those who see retirement as being far off in the future, however, is opting out. Opting out will certainly allow you to take home more of your paycheck, but in reality you won’t be doing anything to help get yourself on track for retirement by taking this route. Even delegating a small amount of money each money to retirement can have a major impact on your retirement over the course of many years, and the earlier you can get started, the better. Don’t make the mistake of letting a little extra money in your pocket each month sway you towards neglecting your retirement; it happens far too often, and many people learn the hard way.

Don’t Put All Your Eggs in One Basket

It’s about as cliché a phrase as has ever been uttered, but not putting all of your eggs in one basket truly is paramount in retirement planning. For a lot of people, stocks are a central element of retirement and can dictate how much money one ends up with after they’ve left the workforce. Put all of your money into a single stock, however, and you’ll be in financial ruin if (or more realistically, when) the company runs into trouble. Ideally, you should avoid investing more than 10% in any one stock, as it’s far better to diversify your investment portfolio. This way, you won’t be out on the street if any single one of your stocks tanks, as the rest of your money will most likely be protected. Be sure to make educated decisions when choosing stocks as well; careless trading can be very dangerous. If you are unsure at any stage, it can be wise to consult with a professional retirement planning service, who will be able to advise you on the right type of investments and the path you need to take to reach your financial goals. A quick search of “retirement planning near me” should help you to find an advisor in your area to assist you.

Don’t Neglect Outside Savings Options

Employer-offered retirement plans can be extremely helpful for those who are unsure about how to handle retirement planning on their own, but this isn’t to say that you should avoid looking into outside options as well. There are a variety of CDs and savings accounts that offer high interest rates and allow you to accumulate perhaps even more wealth than you might be able to through your employer, some of which are quite easy to attain. You might feel as if your employer has taken care of everything for you, but you’ll get more mileage out of your retirement if you take an active role in the planning process.

The thought of retirement can be rather scary, but that’s no reason to ignore it. The sooner you start planning, the more smoothly your transition into retirement will be.

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