Pursuing your retirement dreams is challenging enough without making some common and very avoidable mistakes. Here are eight significant mistakes to avoid when planning for retirement.
- NO STRATEGY: Yes, the biggest mistake is having no strategy at all. Without a strategy, you may have no goals, leaving you no way of knowing how you'll get there—and if you've even arrived. But on the other hand, creating a strategy may increase your potential for success before and after retirement.
- FREQUENT TRADING: Chasing "hot" investments often leads to despair. Create an asset allocation strategy that is adequately diversified to reflect your objectives, risk tolerance, and time horizon, then adjust based on changes in your situation, not due to market ups and downs.1
- NOT MAXIMIZING TAX-DEFERRED SAVINGS: Workers have tax-advantaged ways to save for retirement. Not participating in your employer's 401(k) may be a mistake, especially when you pass up free money as employer-matching contributions.2
- PRIORITIZING COLLEGE FUNDING OVER RETIREMENT: Your kids' college education is essential, but you may not want to sacrifice your retirement. Remember, you can get loans and grants for college, but you can't for your retirement.
- OVERLOOKING HEALTHCARE COSTS: Extended care may be an expense that can undermine your financial strategy for retirement if you don't prepare for it.
- NOT ADJUSTING YOUR INVESTMENT APPROACH WELL BEFORE RETIREMENT: The last thing your retirement portfolio can afford is a sharp fall in stock prices and a sustained market at the moment you're ready to stop working. Consider adjusting your asset allocation before tapping your savings not to sell stocks when prices are depressed.3
- RETIRING WITH TOO MUCH DEBT: If too much debt is bad when making money, it can be detrimental when living in retirement. Consider reducing your debt level before you retire.
- IT'S NOT ONLY ABOUT MONEY: Above all, a rewarding retirement requires good health, so maintain a healthy diet, exercise regularly, stay socially involved, and remain intellectually active.
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- The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. Asset allocation and diversification are approaches to help manage investment risk. Asset allocation and diversification do not guarantee against investment loss. Past performance does not guarantee future results.
- Under the SECURE Act, in most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty."
- The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. Asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss. Past performance does not guarantee future results.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023 FMG Suite.