You may be quite young now and your retirement may be far away. You should not however let the time pass away and make it tougher for yourself to build up a substantial retirement fund. If you plan early, you can make your life after retirement wealthy, prosperous and happy. Here we discuss about some retirement mistakes that you avoid committing.
1. Not setting a retirement plan at all
One very serious mistake that many of you commit is not to set a retirement plan at all. Many of you make inordinate delays in doing so. The more delays you make, the less time you get to build up your fund. It is advised that you should join the retirement plan of the company as soon as you get a job after you finish your studies. You can also join the traditional IRA or the Roth IRA. Without a systematic retirement plan, you can never build up a substantial retirement nest egg.
2. Not setting aside enough money to save for retirement
It is often seen that many of you actually underestimate the amount of money that you will be required to maintain the same standard of life after your retirement. Various studies have found that not keeping enough money for retirement is a serious financial problem that many Americans are facing. To maintain the same standard of life post retirement, you need to save sufficient amount of money. You also need to take into consideration the inflation factor so as to find out the saving that you are required to make so as to build up a substantial retirement fund.
3. Using retirement funds for meeting short term expenses
It is a common trend that many of you use the money that you receive at current periods for meeting short term expenses such as for a trip, for refurbishing your kitchen, for purchasing a car etc. But these current expenses hamper your future financial prospects. Saving for retirement should be your top priority. Only after keeping aside money for retirement saving, you can use your income for meeting current expenses. This secures that you have a prosperous and wealthy future ahead of you.
4. Taking out money from retirement savings
You have the option to borrow from your 401(k) fund. This is however not a very wise financial practice. This way you are actually stopping your wealth to grow. If you take out a 401(k) loan, you have to repay it as well as you have to pay taxes on it. Again, you have to pay taxes on it at the time of your retirement. Again, you have to pay penalties for early withdrawal from your retirement funds.
5. Depending solely on pension and social security
It is advised not to depend solely on your pension and social security income. You should not forgo a retirement plan as there are social security income and pension to support you. You should constantly put in efforts to build up your retirement funds.
If you can avoid these mistakes, you can surely make your retired life much better, prosperous and wealthy.