Wednesday, June 18, 2014
- Start Saving too Late. “People don’t plan far enough ahead . . . They start to think about retirement when they are maybe in their 50s.” People who fail to plan ahead are forced into less than ideal situations. They may have to work longer and sell assets to make ends meet. Start saving money in your late 20s or 30s.
- Missing Out on Tax Incentives. Overlooking tax-sheltered savings is a common mistake. People need to take advantage of 401(k) matching offered by an employer or the tax benefits available through IRAs.
- Keeping Eggs In One Basket. Individuals are commonly too invested in a single company. “I have seen far too many clients with 50, 60, 70, and up to 90 percent of their 401(k) and total investments totally based on their employer . . . That’s a recipe for disaster.” Invest into a variety of funds and asset types.
- Living Large in Retirement. Some individuals can bring themselves to financial ruin during retirement. Make sure you can afford something before you buy it. Individuals should have a detailed budget in place and estimate how much income they will have in retirement before making major purchases.
- Costly Divorces. Anyone experiencing a divorce should consider future value in addition to current value when divvying up assets.
See Money Rates, Advisers: These are the Biggest Retirement-Planning Blunders, The Street, June 16, 2014.