Weekly Tip Apr 17: 5 Common Mistakes to Avoid When Planning Your Retirement

What are some common mistakes that you can avoid when planning for your life after work?

• You Don’t Max Out Your 401k/IRA

  You make the most of your money though the magic of compound interest. Failing to max out your retirement accounts could cost you thousands or tens of thousands of dollars in savings that can be used to fund your retirement.

• You Don’t Have Life Insurance

  If you pass away, your spouse and other dependents may not be able to make mortgage payments or student loan payments on your retirement plan alone. A life insurance policy will offer a lump sum of cash in case anything happens to you and your family needs income to survive.

• You Don’t Have Alternative Sources of Income

  You should have a variety of income sources when you retire to ensure that you remain liquid. In addition to any pension that you may receive, you should have an investment portfolio that provides both dividend and capital gains. This can be combined with your social security benefits to help you live comfortably once you stop working.

• You Haven’t Planned for Emergencies

  As you get older, the odds increase that you will fall victim to poor health. Even a brief hospital stay or a brief stay in a care facility can cost tens of thousands of dollars. For this reason, a retirement planning specialist who earned their master’s degree in aging online recommends setting aside plenty of funds for emergency medical expenses. You should also be prepared for a market swing or other conditions that could suddenly reduce the value of your investment portfolio.

• You Try to Support Your Children or Grandchildren

  While you may want to help your kids get started in life or splurge on your grandchildren, make sure that you can afford to do so. The only person who you have to support once your kids are adults is yourself. It may be a good idea to talk to your adult children and tell them that they are on their own or not to count on financial help that could crimp your own style.

Planning for retirement is not easy as you have to think about what you want today and what you will need in the future. However, by planning for emergencies, getting insurance and setting limits on what you’ll give your children, there is no reason you can’t get to retirement in good financial shape.

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