Today’s HOME Spun Wisdom - July 21, 2006 Investing in a retirement plan doesn't mean you will be financially secure when you decide to retire. Here are 10 common retirement mistakes to avoid.
RISMEDIA, July 21, 2006—If you are making these retirement planning mistakes, you could be in for a sad surprise. Here are 10 common retirement mistakes to avoid:
1. Not taking full advantage of your company retirement benefit: You should invest as much money into your company retirement plan as you can afford. You should invest enough to get your company matching funds if they are offered.
2. Withdrawing money from your retirement plan: By withdrawing money from your retirement plan, you lose valuable interest that is extremely difficult to replace.
3.Not actively monitoring your investments: Monitoring your investments makes sense so that you are aware of any discrepancies. Monitoring also alerts you to how well your investments are performing or not performing.
4. Relying on Social Security for your retirement income: While social security might provide a substantial portion of your retirement income, you should have other means of income as a back up. It's best to have a company pension or retirement plan and personal savings in addition to social security when you retire.
5. Relying on your spouse's retirement plan: Each person must have a separate retirement plan for the best retirement security. If one spouse relies on his/her spouse's retirement plan for his/her retirement, he/she could be in for a very sad surprise. The spouse with the retirement plan could die leaving the other spouse with no income. There could be a divorce or even illness that could compromise the single spouse retirement plan.
6.Forgetting to review your plan regularly: If you forget or ignore reviewing your retirement plan on a regular basis, you might be losing a portion of your retirement income. It is crucial to periodically review your asset allocation, your balances, your goals, and so on to insure you are making the most of your plan.
7. Practicing poor asset allocation: Poor asset allocation can be financial suicide. The secret is to diversify so that if one investment decreases in value, another will hopefully increase
8. Not checking out your broker/financial advisor: If you are going to trust your retirement savings to someone, you owe it to yourself to check credentials and track records.
9. Relying too heavily on your company stock: It's best to have a good investment mix in your retirement account. Your company stock is a very good way to save for your retirement especially in your company retirement plan. However, this can also be dangerous if your portfolio consists of mostly company stock. All companies have lean times and some could have mismanaged finances that could result in bankruptcy.
10. Not taking retirement planning seriously: Think about the life style they might want to keep once the paycheck stops. By starting your retirement plan early, you can grow quite a large nest egg and might just be able to retire early.
Bottom line is to take your retirement planning efforts seriously, diversify your investments, save regularly, and keep your goals in mind. |
