As retirement nears, there are tons of things to think about, like when to take Social Security, how much to take out of your 401(k), creating a spending plan you can stick to, and drawing income from your retirement savings.
That used to be complicated. These days there are no-cost online services that make finding expert help a snap.
The process only takes a few minutes, and in many cases you can be connected instantly with an expert for a free consultation. Take this free, 5-minute quiz and you’ll be matched with three fiduciary financial advisers in your area, all legally bound to act in your best interests.
Now, here are five of the biggest retirement mistakes — and how to avoid them.
1. Failing to plan is planning to fail
A financial plan is basically a map plotting the shortest path to reach your retirement goals. Deciding what you’re going to do, where you’re going to do it, how much it’s going to cost and where the money will come from: all parts of your plan.
But what if your plans change as you approach retirement? That’s OK. It’s your plan; you’re welcome to change it.
Does making a plan sound complicated? It can be. The investments you choose, taxes, and your target retirement dates are just a few of the variables you’ll consider. That’s why if there’s one time in your life you could use professional advice, this is it. Finding an experienced, expert guide in the form of a qualified financial planner will keep you from getting lost.
Use this free matching service to connect with three qualified financial advisers in your area in minutes.
2. Putting off till tomorrow what you should have started yesterday
According to a recent survey by Bankrate.com, the biggest financial regret is not saving enough for retirement. And why don’t Americans save enough? Because they put it off, saying some variation of, “I’ll wait till I have more money”, or “I’ll start when I get closer to retirement.”
If you’re behind on retirement savings, a financial adviser may be able to help you catch up and figure out how much you’ll need to invest to meet your goals. In addition to investing for your future, a financial adviser can offer guidance on budgeting and paying off debt.
But here’s the main thing: While there’s obviously no guarantee, expert advice could make a big difference. Consider this: if you save $500 a month for 40 years and earn an average annual return of 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 a life-changing difference.
3. Retiring too soon or not soon enough
If you’re 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. Remember, women live longer than men, which means you’re more at risk of outliving your savings.
That’s not to say you shouldn’t retire early, but if that’s your plan, run various scenarios to make sure your savings are going to cover your expenses during retirement and offer a lifetime of income.
The other side of the coin: not retiring soon enough. If you’re not sure your savings will be enough, you might work longer than you have to.
You’re much better off knowing what you have and what you’ll need. Replace doubt with certainty and only work as long as you want to. That’s another reason meeting with a financial planner is an idea that could pay for itself many times over.
4. Hiring the wrong financial adviser
It’s no secret that an investment professional could probably earn more on your savings than you would, and they’ll definitely make life less stressful. Unfortunately, not all are created equal. Hire the wrong adviser and you could end up worse off than when you started.
When it’s time to find someone to assist you, always meet with several planners. Talk to them, ask a similar list of questions and assess their qualifications and advice before making a decision. Ask how they get paid and how long they’ve been in the business. Take your time. And always deal with a fiduciary: a planner who’s legally bound to put your interests above their own.
Finding the right person for your situation used to be difficult. These days, finding the right adviser you know was well-vetted is a walk in the park. Start your search with this free financial adviser matching tool, which matches you with up to three qualified financial advisers in under five minutes. Every adviser is vetted and is a fiduciary.
5. Taking too much risk, or not enough
Risk is a funny thing. Take too much and you can lose your savings. But take too little and your savings may not last as long as you do.
The money you retire with is money that can’t be replaced. That’s why we lean toward low-risk, low-return investments as we age. But since inflation eats at your savings like cancer, that seemingly safe nest-egg drops in value in terms of what it can buy. Bottom line? Often, taking no risk presents risks of its own.
Investing, both before and after retirement, is about balance: harnessing investments designed to keep your income flowing, inflation hedged and risks manageable. Your strategy will require safe, guaranteed-income investments, as well as some exposure to stocks and other inflation-protection investments.
You can learn to do it yourself, or hire an investment professional for some advice and guidance, both pre and post-retirement.
The bottom line
There was a time when throwing a little into a 401(k) was all you had to know. But as you age and your savings grow, small mistakes can have a devastating effect on your quality of life. You didn’t need a second set of eyes when you were young, but wouldn’t it be nice to have expert help now? Especially if you can get a free appointment and advice.
If you’ve got $100,000 or more in investments, and are ready to be matched with local advisers that will help you achieve your financial goals, take this quiz now.
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