Top 10 Retirement Planning Mistakes

It is never too soon to start putting away money for your retirement. Today, there are several options available, including IRAs and 401(k) plans, both of which are popular and help grow money for retirement tax-deferred. While most of us are aware of retirement plans, and in many cases have started

1. Not taking advantage of time: The earlier you start the more your money will have time to grow in your retirement accounts. Too many people make the mistake of putting off starting a retirement savings plan.
2. Not investing regularly: Many people start investing and then stop. If you do not invest on a regular basis, you cannot expect your retirement savings to grow.
3. Not taking full advantage of tax-free retirement accounts: The more money you put into tax-free retirement accounts, the more you can grow tax-free. If you can afford to put in the maximum contribution to your retirement accounts each year, you should do so.
4. Not allocating assets wisely: If you are investing too conservatively, you may not be able to build the amount you are hoping to have for your retirement years. Conversely, if you are getting close to retirement and are investing in high-risk investment vehicles, you may lose much of what you have worked so hard to save. How you allocate your assets is more important than what you select within a given asset class.
5. Not creating a post-retirement plan: As you approach retirement you should determine how much money you will need and establish a plan for handling your money during your retirement years. This would include knowing all of your income sources, including investments, Social Security, and pensions.
6. Not paying attention to your 401(k): Although most employees who are eligible for a 401(k) plan through their employers are taking advantage of it, many are not paying much attention to their investments within the plan. You should follow your investments in your 401(k) and make the necessary adjustments as you approach retirement.
7. Cashing out or borrowing heavily against your 401(k): The 401(k) is not a security blanket to be used when you need additional funds. It is the core of a retirement plan. Let it grow.
8. Not considering tax and inflation: When considering your post-retirement income needs, you must remember to account for inflation and the inevitable taxes.
9. Relying too heavily on Social Security: When calculating your income sources as a retiree, you cannot rely too heavily on Social Security. While it was never meant as a complete source of retirement income, it once factored more heavily into a retirement plan. Today the potential impact of Social Security on your retirement income is diminishing.
10. Relying too heavily on your company's stock: Many people make the mistake of believing that owning many shares of company stock indicates their loyalty to the company. It does not. It is an investment and like any other investment it can go either way. While you may wish to own some shares in your company, it is typically advised that you do not invest too much in your company’s stock. Spread your assets around.