Planning for retirement can be exciting, anxiety-inducing and complicated. Sometimes even planning further than the weekend is impossible, so to plan your entire work-free retirement? That seems like a lot to handle.
When you’re planning something this big, it makes sense that you’d stumble, get turned around and make mistakes once in a while. Below are some common mistakes to avoid when you set out on your retirement planning journey.
Avoid these 6 mistakes when crafting your retirement plan
Even if retirement seems light-years in the future, it’s never too early to start planning. Ignoring it is actually more stressful than working out a plan, according to Investopedia.com contributor Michael Conway.
“To start, write down your current financial needs and future goals. Most important, seek help. Professional advisors can see the hidden gaps in your planning that might hurt your financial future,” Conway advises.
2.Putting all your eggs in one basket
Relying solely on one investment or type of investment, stock, bond or account will limit the scope of your retirement.
To avoid being a one-trick pony of retirement funds that only fixate on the rate of return, U.S. News & World Report contributor Maryalene LaPonsie recommends you establish a diversified portfolio which includes a variety of fund types.
Retirement plans, paperwork and accounts need to be protected. Forgetting to assign beneficiaries to all of your retirement avenues (including an IRA) can detrimentally impact its worth and leave your loved ones in a mess of red tape, according to Kiplinger.com contributor Mike Piershale.
Plan ahead and think about who should benefit from your planning in case you can’t. A spouse or sibling is probably a safe bet, but think about what works for your situation.
4.Neglecting to plan for today
With all the focus on the tomorrows to come after you’ve stopped working, it can be easy to forget about the now.
In addition to planning for your retirement Conway advises earmarking necessary funds for your mortgage, children’s college tuition and car loans. He also advises you to prepare a well-padded emergency nest egg for when life decides to throw you a curveball.
5.Missing the fine print
The world of finance is fraught with fine print, stipulations and penalties. If you don’t pay close attention to every detail, such as conditions for rolling over a company retirement plan into an IRA, you could suffer from potentially steep and definitely annoying penalties that will rob you of your account’s full worth, according to Piershale.
Working with a financial advisor can help make this process easier because they know all the ins and outs of various plans and contracts.
6.Ignoring your retirement plan
You’ve done the hard work — dedicated countless years to the workforce, sought out advice from a reputable financial planner, established a diversified portfolio and officially retired. So, you should be good to coast now, right? Sadly, no.
According to LaPonsie, setting your retirement plans on autopilot is a quick way to negate all your hard work. He instead recommends a yearly review of your financial hopes, dreams and goals.
“In reality, a plan only remains relevant if it constantly evolves to adjust for market conditions and a retiree’s lifestyle needs and goals,” writes LaPonsie.
Need Help With Your Retirement Plan?
Planning for your retirement is an ongoing process and requires the same dedication you give or have given to your working life. You’ll definitely make mistakes, but with some thoughtful planning, attention to detail and trusted advice, you’ll be able to draft a retirement plan that serves you well.
Now is a great time to either review or update your retirement plan. Meet our experienced financial advisors and learn more about what we can help you do.