7 Retirement Mistakes You Will Regret Forever

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As more and more baby boomers near retirement, dreams of travel turn to concerns about how to fund those golden years. Retirement planning is complicated. It’s no surprise we make mistakes along the way.

There are many things to consider, such as making (and sticking to) a budget, when to take Social Security, knowing when to claim your 401(k) account, and more. The decisions you make now will have impacts on your future.

But you don’t have to do it alone.

A Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial adviser.

The value of working with a financial adviser varies by person, but according to an independent study, people who work with a financial adviser feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

A recent Vanguard study found that, on average, a $500,000 investment would grow to over $3.4 million under the care of an adviser over 25 years, whereas the expected value from self-management would be $1.69 million — or 50% less. In other words, an adviser-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

This no-cost online service simplifies the difficult process of finding a financial adviser. A short questionnaire helps match you with up to three local fiduciary financial advisers, each legally bound to work in your best interest. The whole process takes just a few minutes, and in many cases you can be connected instantly with an expert for a free retirement consultation.

Meanwhile, here are seven of the biggest retirement mistakes — and how to avoid them.

1. Failing to plan for retirement

No one likes to think about retirement, but ignoring it could be the difference between a stress-free retirement and one filled with worry. Dollar for dollar, a comprehensive plan can help you manage risk, make sure your savings will outlive you and cover your expenses in retirement.

The first step to making your retirement plan happen is figuring out how much you actually need. The second step is getting a little creative about how you might get there. Together, these make up a solid plan.

Also, when preparing for retirement, it’s important to consider a number of factors — from what types of investments to focus on, to how to minimize potential tax liability. This takes time and professional advice. However, when you do have a plan, it’s easier to stick to it, and reach your retirement goals sooner than you think.

Laying out a successful retirement plan is more manageable when you’ve got someone to help you shoulder the load. Seek the help of a qualified financial planner to analyze your income and expenses, determine how much money you need to retire comfortably and develop an entire financial plan geared toward reaching that goal.

Use this free matching service to connect with three qualified financial advisers in your area in five minutes.

2. Putting off saving for retirement

Americans’ biggest financial regret is not saving enough for retirement, according to a recent survey by Bankrate. People often put off saving for retirement, but the longer you wait, the harder it will be.

No matter where you are in your savings journey, now is the time to start. There are so many benefits of starting early: You still have time on your side. Compound interest works for you, not against you. The more years you invest, the more years your money has to grow.

Consider this: if you save $500 a month for 40 years and earn an average annual return of just 5%, you’ll end up with nearly $725,000. Double that return to 10%, and you’ll retire with almost $2.7 million — that’s more than enough to cover your expenses and leave extra for travel or to spend it however you wish

If you’re behind on retirement savings, a financial adviser may be able to help you catch up and figure out how much you need to invest to meet your savings goal. In addition to investing for your future, a financial adviser can offer guidance on budgeting and paying off debt.

3. Retiring too early

If you are thinking about retiring soon, you may dream of quitting your job and traveling the world. However, before you call it quits, there are a number of reasons you may want to think things over. First, you may live longer than expected, run into unforeseen health issues or face tough financial times that force you to cut back on expenses.

That’s not to say you should not retire early, but if you do, make sure your savings are going to be sufficient to cover your expenses during retirement and plan for a lifetime of income.

If you’re nearing retirement, meet with a financial planner to determine the optimal time to retire based on your own situation.

4. Hiring the wrong financial adviser

Whether it’s building wealth or securing a comfortable retirement, hiring a financial adviser is a major life decision. Unfortunately, not all advisers are created equal. Hire the wrong one and you could end up worse off than when you started.

When it’s time to find someone to assist you, meet with several planners and explore their qualifications before making a decision. Just as you wouldn’t settle for poor advice from a doctor or an incompetent mechanic, neither should you settle for bad retirement advice from an unqualified adviser.

These days, finding a financial adviser you can trust doesn’t have to be hard. Start your search with this free financial adviser matching tool, which matches you with up to three qualified financial advisers in five minutes. Each adviser is vetted and is a fiduciary, which means they are legally required to act in your best interests.

If you’d like to be matched with local advisers who will help you reach your financial goals, get started now.

5. Not managing investment risk

It’s a mistake that many people make in investing: They maintain the same amount of risk as they age. While growing older brings with it greater financial urgency, it doesn’t mean that you should suddenly be less conservative with your money.

Done properly, there is nothing risky about investing in your retirement. Investing can be risky, though, if you have too much money in the stock market or in any one company, making your total holdings vulnerable to drops.

What’s important is that your income strategy includes safe, guaranteed retirement-income investments if you want to protect your retirement savings from market downturns. If you need help, hire an investment professional to develop your financial strategy.

6. Asking family and friends for retirement advice

When Americans need retirement advice, many turn to family and friends first.

In fact, 35% of workers say they use family and friends for retirement advice, according to a survey from the Employee Benefit Research Institute.

Unfortunately, asking family and friends to map out a route to your golden years is a bit like asking Aunt Edna — rather than a doctor — for tips on treating your wonky gallbladder.

Sure, you can rely on loved ones to help you make perhaps the most important financial decision of your life. But you can do better. So, seek out the advice of a pro, or properly educate yourself.

If you want the advice of an expert, use this free tool to match with qualified financial advisers in your area in five minutes.

7. Withdrawing from your retirement funds at the wrong time

Withdrawing from your retirement accounts at the wrong time could cost hundreds of thousands of dollars in retirement income.

If you’re worried about the most efficient time to start making withdrawals, consider that a 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial adviser.

Determining the optimal sequence to withdraw money from your retirement accounts is different for everyone. Consult with a retirement planning specialist to assess your situation and make a withdrawal plan that’s right for you.

Quiz: Find out if you are ready to retire

Figuring out the right time to retire doesn’t have to be hard. SmartAsset’s free quiz matches you with three fiduciary financial advisers in your area in five minutes. Each adviser has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisers that will help you achieve your financial goals, take this quiz now.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


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