Many of us dream about the day that we can retire from the workforce, take a deep breath and just enjoy life. Sometimes, the everyday stresses of our jobs and work environment tend to overwhelm us and we go into our happy place thinking of all the things we’d be doing – or not doing – once we hit that age and status where we can just retire. After all, that’s why we have a 401K and a retirement plan that we constantly invest in, right? (“Bueller?”) While retirement is not for quite some time for some of us, it’s never too early to plan! In fact, planning ahead and avoiding mistakes will make for an easier and better retirement, which is why you should look into doing it now, no matter how much time you have left before you retire.
Here are the top five retirement mistakes you should avoid:
1. Not saving enough, then and now
Don’t wait to start a retirement savings – start it now. The sooner you start saving, the sooner you’ll have a good idea of how much your retirement goal aim is. The key is to make saving for retirement a priority at any age!
2. Not partaking in your company’s retirement plan
If and when you’re able to participate in your company’s retirement plan, jump for the chance to do so! Long gone are the days when it was taken care of for you – you have to act on it. Luckily, enrolling online is very easy and once you are enrolled you must contribute. Many companies will match your contribution for a minimum, which is basically like a raise. It’s a win-win!
3. Cashing out your plan
If and/or when you leave your employer, it’s not always smart to cash out your retirement. Depending on your age, you will have to pay a 10% penalty for premature distribution – that age is 59.5 years old. If you can, avoid.
4. Underestimating health care costs
Most people think that Medicare will take care of most of the costs, which is simply not true. Medicare costs to retirees rise each year, in fact. To get a good sense of what your health care costs will be once you retire, check out the AARP’s Health Care Cost Calculator, which takes into account weight, age, health, etc.
5. Don’t put all your eggs in one basket.
Diversify your investments. Stocks, bonds, bank CDs, and money market instruments are all great investments to look into.
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