Are You Making These Retirement Savings Mistakes?
Saving for retirement is one of the most important things you can do for your financial future. Even so, retirement savings mistakes are a common occurrence.
Unlike in the past when companies started withdrawing money from your paycheck on day one toward your pension, today, most people make the decisions themselves of when to begin saving for retirement and how much to save. Those decisions are vital.
Take a look at some common mistakes people make when saving for retirement so you can avoid them and make the most of your opportunity to save for your future.
Most of us still remember the Great Recession. We remember what it felt like for the market to crash and uncertainty to set in. But that doesn’t mean you should be afraid of investing in the market. If you’re young, you should be aggressive in your savings. Having a fund full of bonds is not going to help you build a solid portfolio. If you start early, then the market – and your retirement savings – will have time to recover…
…Loans and Early Withdrawals
Some people take a loan out from their 401(k). The rates are better than a loan they might get at the bank. But if you lose your job, you’ll owe the full amount immediately. If you take the money out as a withdrawal, you’ll face a range of fees and penalties. These accounts are designed as an incentive to save for retirement, and they’ll punish you if you try to use the money for something else. “The money is for retirement, not for a new house or a new car,” said Lance Cothern, personal finance expert and blogger at Money Manifesto…
– via Investopedia
Two More Ways to Avoid Mistakes When Saving for Retirement
Here’s a look at two more ways to avoid common retirement savings mistakes. Pay attention and watch your savings grow and your financial future improve!
If you are lucky enough to have a pension, you know that as soon as you started working, money was taken from each paycheck to help fund your future needs. But as pensions become less common, most of us must fund our retirement accounts on our own. We decide when to start and at what level to contribute.
Early in one’s working life, there are significant spending needs, such as paying off student loan debt, saving for a down payment for a house or raising kids. Putting money aside for far-off needs such as retirement often takes a back seat to these more pressing demands. But waiting too long to start saving is a mistake. When you’re young, time is your biggest asset, thanks to compounding interest. Start contributing to a retirement account as early as you can.
It’s great that you’ve started putting part of your income toward retirement savings, but what percent of your check are you deferring? A good target is 10% of your salary. If you aren’t there yet, consider bumping up the percentage each year. Not deferring enough of your income today can haunt you later on. If you can’t immediately increase your savings rate, do so the next time you get a raise. Move half of your additional pay to the retirement account. Doing this each time your pay increases over the next five years will help you boost your total annual deferral percentage.
– via NerdWallet
How much are you saving for your retirement each month?