In my profession as an investment adviser, I counsel many people on their retirement options. Some of these individuals are young and planning for their future, with a good investment plan. Some of these clients are not-so-young, and come to my office out of fear, wondering how they are going to finance their retirement. I have seen a lot of mistakes made by investors, but there are a few very common retirement planning mistakes that I see.
The first, and perhaps worst, mistake is made by those who do NOT plan for retirement at all. Many older clients were never taught to plan for retirement and now find themselves ready to stop working, or being forced to stop working, without enough income to keep them afloat. Now I have to get them ready for retirement with little to no time before the big event. Don’t let this happen to you – start planning now.
Many people feel that they can plan for their retirement on their own, without the help of a certified investment planning expert. I have had so many clients finally come to me for help, after years of going it alone. Books and other instructional materials can go a long way to helping you understand your retirement and how to invest, but they can’t do the work of a certified professional. You need someone that knows how to invest and can help you increase the value of your investments. Search your local area for someone that will help you without charging you exorbitant fees for their services.
Another problem I see with older clients is not enough retirement. They saved for years, but didn’t save enough, and now they don’t have enough money to live on comfortably. Likewise, many of these older clients counted on Social Security benefits to carry them through their retirement years. This is no longer an option for the majority of individuals. Have your investment advisor help you figure out how much retirement income you will need, and add a little padding to that. This will help you figure out how much you need to save each month.
Many clients keep all their eggs in one basket, and don’t diversify their investments. Many of them count on their 401K, or other retirement fund, and don’t have their money spread around in enough areas. This can cause you to lose money, especially in the event of a deep recession. Spread your money around; put some in a 401K, some in the stock market, some in mutual funds, and other investment vehicles that your advisor suggests. This will help you get the most out of your money and make it work for you.
Finally, I have seen many clients who have withdrawn money from their retirement funds to fund emergencies, or even pay for vacations, vehicles or other frivolous expenses. NEVER, EVER do this. Take a part-time job, sell items you have laying around the house, do whatever you have to do, but never sacrifice your retirement and your future for the present.
It is NEVER too late to start planning for retirement, but sooner is better. Sit down today with a trustworthy, certified investment advisor and start a retirement plan so you can make sure that you are prepared for retirement.