Retirement planning can be difficult, but that shouldn’t stop you from getting started. However, you do have to be careful. After all, there are many mistakes people make with their retirement planning. Whether it’s starting too late or not regularly reassessing your portfolio, things can go wrong. Here are just a few retirement planning mistakes you don’t want to make.
Starting Too Late
People don’t usually start thinking about retirement until their 30s or 40s. However, you are missing out on thousands of dollars by not starting your portfolio as soon as possible. It doesn’t matter if you can’t invest a lot of money, you still need to get started. Even if you’re only able to invest $1,000 a year for the first 5 years, that’s still $5,000 plus any gain you earn through your investments.
Not Investing Enough
You need to invest as much as possible. The exact amount you can invest will depend on which type of methods you use. For example, if you have a traditional IRA, you will only be able to invest $5,000 a year. However, you should do everything possible to meet that amount. Not only does this cut down on the amount of taxes you have to pay, but that money will really add up over the years.
Using Only One Method
There are a number of retirement funding options and you have the ability to take advantage of more than one. For example, if you have a 401(k) through your employer, you can also get an IRA. Other options include real estate investing, bank bonds, and precious metals. A diverse portfolio will help ensure your retirement dreams come true.
Taking Loans From Your Retirement Account
It’s true that you can take loans from your 401(k) and IRA. However, that’s not always the best idea, especially if you don’t plan to pay yourself back. You should only touch this money in the worst emergencies or if you plan to pay yourself back, which will require paying interest to yourself.
Not Regularly Reassessing Your Portfolio
Things change. That’s why you must reassess your portfolio from time to time. You want to make sure that your stocks are still doing well and you may even need to switch from high risk to low risk stocks as you get closer to retirement.
Retirement planning can be difficult at times and there are a number of mistakes people make. However, it’s important that you take the leap so that you can retire in comfort rather than working throughout your golden years.
About the Author: Celeste Perman is currently a retirement planning advisor who hopes to one day transition into full-time trading through Suretrader or some other investment group. She plans on starting some courses on investment and business in the next month.