Retirement can be a scary thing to think about. One, you will be entering your twilight years is scary enough, but then you start to think about having enough money to live off of. How much will you need? Are you contributing enough right now? Those are serious questions that you will have to review with your spouse and/or financial planner to get you in line to have enough to life off of when you need it. By avoiding a few ways that you can mess up your retirement savings, you can live a long and financially stable life.
Waiting Too Long
Sure, it may seem like forever until you retire, and that is probably the furthest from your mind if you are young and new to the workforce, but the longer you wait, the worse it will be for your future savings. You might say to yourself that you can always make it up later, but that time will come so quickly that before you know it, you will have been employed for years without anything to show for it. If you currently don’t contribute, then tomorrow morning that needs to be the first thing you do.
Thinking You Can Live on Less When You Retire
Right now, work takes up a big chunk of your day, not to mention your week, with really only Saturday and Sunday as your free days. It can be tough to spend money during the week unless you are going out to eat a lot, but really on the weekend is when you start to open up the wallet. If you think that you will not need that much money when you retire, think again. You will have all of that free time, and you will want to start to live as you go into your golden years.
Only Relying on a 401(k)
If you are contributing to your company’s 401(k) account, that is a good start. Now the question comes in, how much? Well if your company matches contributions up to a certain point, say 6%, then you should at least be contributing 6% to get the full match, otherwise that would be leaving money on the table. Beyond that, increasing each year until you hit the max allowable $18,000 per year. If you have hit that, then you can take out an IRA for additional savings.
Having Other Priorities
As you go from college to career, the normal life changes occur when it comes to buying a house, getting married, having children. We all go through it, and those are sure to be necessary priorities, but that is now reason to ignore saving for retirement. If you can make retirement just as a priority you can avoid pushing off to the side, and the sooner you contribute, the more you will get used to that portion of your check being utilized, so you rely less on having that money available to spend.
Being Scared to Invest Again
For a lot of the younger millennials not being in the workforce around the last financial crash roughly a decade ago, they were sure to feel the pain as children with their parents hurting by losing jobs, houses, and their retirement funds tanking. This could be scary to want to invest after what happened previously, but between 401(k) and IRA will net you the greatest compound interest, far greater than keeping in a savings account, or under a mattress that will not grow to the amount you need.
Waiting to Rely on Social Security
A portion of your paycheck going to social security, so you may be thinking that you are continuing to build up this fund to receive when you are age. While hopefully that is the case and you are able to rely on this income source, with studies showing that it may run out in the next couple of decades, it may not be there when you need it. You may not be able to dodge paying it now, but let’s hope that we can take part in this benefit.
Not Planning on Living Long Enough to Enjoy It
You always hear about 40 is the new 30, well 60 is the new 40, or something like that, but the point is that we are staying youthful and living longer. If you do retire, say, at 65, you still have a pretty good chance on living to enjoy your nest egg for the next twenty years, so you need to make sure you save up enough money to continue to draw money for living expenses and life experiences.