Attorneys often advise their clients in matters of estate planning. In the course of this type planning, having a comfortable retirement is typically one of the top priorities. However, by the time advice is sought, irreversible mistakes may have been made and others should learn from those and avoid them.
One of the most common, and the most destructive, mistakes is using retirement money, or savings, to pay down debt. Not only does this mistake leave a future retiree with little to live on, it can create a catastrophe if an emergency arises. When there is no money for the emergency, large amounts of high interest debt or bankruptcy may be the only answer. Even though it may seem like a good idea to pay off debt, which may be accumulating interest, leaving an empty retirement account and no savings will only put a person in a worse financial situation than when debt was the only problem.
Another mistake that seems to creep into estate and retirement planning is the lack of a plan and foresight. Leading up to retirement, planning to save, and actually doing it, is the only way to build the nest egg. Without a budget, savings will be put off until the next paycheck, or until after the next project on the house, and eventually enough time will pass that building an adequate nest egg is impossible. Another lack of planning is failing to obtain proper medical insurance. Especially among the self-employed, medical insurance may seem like an unnecessary expense for an otherwise healthy person. However, if an expensive medical condition strikes, those monthly premiums could have protected a retirement account and years of savings.
Lastly, some are not aggressive enough, opportunities pass, and all of a sudden it is too late and there is not enough to retire. Being aggressive does not necessarily mean putting retirement money into high-risk, high-reward places. That is almost never prudent. However, the markets should not be avoided entirely for fear of loss. The key to building a retirement fund, and having an estate to plan for, is allowing the money that has been made and put away to make more money. Only by investing, wisely of course, can this happen. Another failure to be aggressive is in earning in general. Approaching retirement age and looking back at missed opportunities to make additional money is disappointing. Those opportunities are not coming back. When an opportunity to earn extra money arises, saving for retirement should be motivation to take it.