Common Retirement Savings Mistakes and How to Avoid Them
Often, people fail to plan for their future. When you’re in your 20s, retirement seems far away but as you get older and start to map out your future plans, you may realize you don’t have enough money to live off of during retirement.
Focus on retirement first
A common mistake people make is saving for costly future items that aren’t related to retirement, such as your children’s education or a new house. While it’s important to have savings, don’t lose sight of your long-term goals. My best advice is that it’s never too early to start saving for your retirement.
Evaluate your assets
Another common mistake is that people think they have enough assets to live on when in reality, they don’t. You have to think about how much you need to live your life without a job and how much you can spend each year. People often forget that when they’re working, they have access to an employer-sponsored retirement savings plan and when they retire, that plan goes away, and they’re left paying for all expenses on their own. This results in an increase in healthcare costs that people simply correlate with a deduction in a paycheck and not a standalone cost.
Plan ahead and seek professional support
These aforementioned costly mistakes are usually due to lack of guidance. People sometimes turn to non-professional sources for advice rather than an advisor or financial planner who can help you make smart choices that are right for your own personal needs.
Professionals can help you avoid the misstep of retiring too early without crunching the numbers and planning ahead. It’s important to see the big picture and make these big life decisions based on all major areas of your life, including retirement and insurance needs.
Make sure you understand what comprehensive planning is all about and that you know what types of investments you’re putting your money into. Also, make sure you’re taking the appropriate level of risk that you are comfortable with and that fits your future needs. Finally, understand how your taxes will change in retirement. Tax planning should be an integral part of any retirement planning discussion you have with your advisor.
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The information and opinions expressed in this message are solely those of the author and do not necessarily state or reflect the opinion of UMB Bank n.a., UMB Financial Services, Inc., or UMB Financial Corporation. This communication is provided for informational purposes only. UMB Bank, n.a. , UMB Financial Services, Inc., and UMB Financial Corporation are not liable for any errors, omissions, or misstatements.
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