COSTLY Retirement Planning Mistakes

Retirement planning is not something a person sits down to write out a few years before exiting the workforce. It’s a long, drawn-out undertaking where it’s helpful to start early, and very important to keep always in mind through the years to avoid costly retirement planning mistakes.

There are some common retirement planning misdeeds, such as incurring additional taxes by withdrawing from a retirement fund too early. However, two very costly mistakes can catch many retirement planners by surprise.

First, don’t forget about taxes or other potential additional costs way down the road when setting your retirement funding level target. Distributions from retirement accounts are taxed as regular income, so big withdrawals can lose sizable chunks of money.

Think about increasing your ultimate retirement savings goal to cover future taxes. Keep in mind that tax rates could be raised years down the road to make it hurt even more. Do not expect today’s conditions, e.g. tax brackets and rates, to remain forever.

Second, avoid the impulse to stop working early. Whether that means cashing out of a retirement fund early, stopping or reducing contributions as retirement approaches, or simply deciding to retire too early. All of these impact the overall value of retirement funds, which negatively impacts the compound growth potential from interest.

Hindering the growth of the total retirement fund, such as by reducing or eliminating consistent contributions to it (such as from ongoing paychecks), chips away at the interest compounding effect, which can be significantly costly long-term.

Finally, perhaps the most costly mistake is poorly planning for retirement. Recent federal studies estimate that almost a quarter of Americans lack retirement savings or pensions entirely — a sobering thought. The best retirement plans take time to develop properly, with adjustments needed along the way, which makes it imperative to establish a plan as early as possible.

Get in Touch

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related Articles

Skin Cancer: How to Examine Your Own Skin

How Prevalent is Skin Cancer? An estimated one in every five Americans is at risk for developing skin cancer during their life. The good news...

Prevent Your Dog From Drowning (seriously)

With temperatures rising, time around the pool or other bodies of water are a welcome relief for both dogs and pet owners alike. However,...

Avoid These 4 Sunscreen Ingredients

We all know that wearing sunscreen is important for our health, our skin, and our appearance. From preventing wrinkles to stopping skin cancer, sunscreen...

Tea & Heart Attacks

0
Yearly, 647,000 Americans lose their lives to heart attacks. While many people try to combat this with various activities, it doesn’t stop the number...

Sleep And Your Brain

0
A good night’s sleep is not just vital for resting and repairing your body, but is crucial for brain health too. While your body’s...

New COVID-19 Symptoms Emerge

0
The novel coronavirus and COVID-19 pandemic that is gripping the planet is ever-evolving. As scientists and researchers learn more about the disease, they try...