Ten Common Retirement Planning Mistakes

Ten Common Retirement Planning Mistakes

You have read all the suggestions to start planning for retirement when you are 20. You got a good job at a prestigious company right out of college and you signed up for their 401(k) plan. You convinced your spouse to make sure to sign up for their retirement account at work. But are you still making one of these ten common retirement planning mistakes?

Not taking FULL advantage of your company's retirement benefits. If you thought that 3% was a good amount, think again. Does the company match up to 5%? If the company is willing to match more than what you are investing, you are missing out on free money. I cannot stress this enough, they are GIVING you money. Also, are you investing all that you can afford in the plan? There may be extra money over and above what your company will match that you can afford to put in. Do it.

Withdrawing money from your retirement plan. When you withdraw funds from your retirement account, you are taking away the opportunity for interest to accumulate. Some companies offer 401(k) loans, but check out all the stipulations when taking advantage of this situation. Also, early withdrawals are usually subject to penalties or fees.

Not monitoring your investments. If you are not monitoring your investments, you may not know that your retirement is invested in a bunch of funds that are all going downhill. You should actively monitor and make changes to your retirement accounts as you and your investment advisor see fit.

Relying solely on Social Security for your retirement. While the government has set up this system to help seniors survive after working age, Social Security does not provide the funds that many are accustomed to in today's world. Having a company matched retirement plan or IRA investment will help you have ample reserves for health care related issues as well as the fun aspects of being a senior citizen.

Relying on your spouse's retirement plan to make up any differences. No one likes to think of the bad things, but there is always the possibility that your spouse could die early and leave you with very little for retirement. Or there could be a divorce, leaving you with none of their retirement. A medical problem could cause one of you to have to drain your retirement account at an early stage in your retirement.

Forgetting to review your plan regularly. This goes along with not monitoring your investments. Make sure that you make a monthly or at least quarterly appt with your financial advisor to sit down and review your plan and make sure it is going in the right direction.

Practicing poor asset allocation. Your mother always told you not to put all of your eggs in one basket. The same goes for investments. Make sure that your investments are diversified correctly.

Not checking out your financial advisor. There are a great number of good, reputable brokers that would love to handle your investments. Make sure that you get some references before turning over your retirement investments to a stranger.

Relying too heavily on your company's stock. Although you love your company and get a better return in your retirement account by purchasing its stock, it is not always wise to put all of your funds into one company, no matter how strong and stable you may think they are.

Not taking retirement planning seriously. We have already established that you have a retirement account, but if you do not take that planning seriously, you may do any number of the things listed above. Following these guidelines is detrimental to your successful retirement account.