Planning for retirement can be a challenge for those who do not have specific goals or a financial plan established. With retirement several years away for most people, it can also be difficult to think realistically or estimate how much should be saved. To protect your golden years and avoid common money mistakes that may be delaying your retirement, there are a few tips to follow to stay on track.
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Withdrawing From a Fund
Withdrawing from a retirement fund often results in penalties, making it easy to waste hundreds to thousands of dollars in a single transaction. Avoid withdrawing money for a vacation or a down payment on a home, as money should only be taken out for emergencies.
Although your 401(k) may be growing at a steady rate, outstanding debt that you have can easily derail when you retire. It’s important to work towards specific retirement goals, but debt should also be paid down to ensure that you live comfortably once retiring. According to Faber Inc., a company that offers a bankruptcy trustee in stony plain, the debt should be paid off first before saving for retirement due to the hefty interest rates that can cost thousands of dollars each year.
Waiting Too Long to Save
With job losses and changing careers, it can be easy to put saving for retirement on the back-burner when times are tight. However, just waiting five to 10 years to begin saving can delay retirement and make it difficult to make specific goals that will allow you to maintain your lifestyle. It’s important to begin saving at least $300 a month by the age of 25 to reach $1 million dollars by age 65 for investments that will grow by eight percent each year.
Neglecting Health Care Costs
Many people forget that with age comes illness, ailments, and diseases, which can immediately increase the cost of healthcare. This should be factored into a retirement plan without depending too heavily on Medicare, which will likely not cover all of the expenses.
When maintaining a career and bringing home a paycheck, it’s important to take the future into consideration and realize that today’s actions will impact the later years in life. By avoiding common mistakes and following a financial plan, it will work to secure your future without delaying when you’re able to retire and enjoy some of the best years of your life.