Many people think about retirement, but not everyone takes the time to properly plan for it. Choosing the right retirement plan is a crucial first step, and William Schantz believes that there are a few common mistakes people make that can end up costing them dearly down the line.
Retirement Plan Mistakes to Avoid
Not doing your research
When it comes to choosing a retirement plan, it’s essential to do your research and know what you’re getting into. There are many types of retirement plans out there, and not all are right for everyone. Make sure you understand the pros and cons of each before making a decision
Focusing on the short-term
William Schantz believes that a retirement plan is a long-term commitment. Yes, you want to choose a program that will give you the best return in the short term, but you also need to make sure it’s something that will still be beneficial down the road. Keep your future self in mind when making your decision.
Not contributing enough
One of the people’s biggest mistakes regarding their retirement plan is not contributing enough. It’s important to remember that the more you put into your retirement account, the more you’ll have to live on later in life. Make sure you’re contributing as much as you can each month.
Investing too conservatively
While you don’t want to take too many risks with your retirement savings, you also don’t want to be too conservative. If you invest too conservatively, you may not see the growth you need to reach your retirement goals. Find a happy medium between risk and safety.
Not diversifying your investments
When it comes to investing for retirement, diversification is critical. You don’t want all of your eggs in one basket. Make sure you’re investing in various assets to avoid putting all of your money at risk.
Withdrawing too early
One of the biggest mistakes people make is withdrawing from their retirement accounts too early. You’ll be subject to penalties and fees if you take money out of your retirement account before you’re supposed to. Plus, you’ll have less money to live on later in life. Wait until you’re at least 59 ½ to start taking withdrawals.
Not rebalancing your portfolio
As you get closer to retirement, it’s important to rebalance your portfolio. This means selling some of your more volatile investments and buying more conservative ones. This will help protect your nest egg from market fluctuations.
Failing to plan for inflation
When planning for retirement, don’t forget to factor in inflation. Prices for goods and services always go up over time, so you’ll need to account for that when estimating how much money you’ll need to live on in retirement. Make sure you have a cushion if prices increase more than expected.
Not taking taxes into consideration
When withdrawals are taken from traditional retirement accounts, they’re subject to taxes. Make sure you factor this into your planning so that you don’t end up with a nasty surprise come tax time.
According to William Schantz, those mentioned above are just some of the common mistakes people make when choosing a retirement plan. Be sure to avoid these pitfalls to enjoy a comfortable retirement.