The number of retirees receiving Social Security benefits is around 45.1 million as of 2019. While we all want to retire as early as possible, most working Americans are still making typical retirement mistakes that prohibit them from retiring sooner rather than later. Here are the top 5 most common retirement mistakes to avoid:
1. Not contributing to the max for your retirement accounts. Many people forget that they should be contributing each year to the max on their retirement accounts. For instance, make sure you contribute the maximum allowable amount on your employer-sponsored 401K. If you don’t have a 401K, you can open up a Roth IRA account.
2. Not budgeting enough for retirement. If you retire at the age of 65, you probably need to have enough money to last another 25 to 30 years. A good rule of thumb is to have at least 80% of your pre-retirement income saved. Keep in mind that there are still taxes you have to pay with your retirement savings. Not only that, healthcare is expensive, and even Medicare only covers certain aspects of healthcare costs.
3. Quitting your job. It is said that a person changes careers at least three times during their lifetime, and every time you do, you may forget that there is money left in your employer’s 401K or stock options. However, some companies don’t let you have full ownership of the money or stock until you’ve been there for a set period of time. Make sure it’s worth quitting the job if you have money invested.
4. Taking Social Security early. The longer you wait to file for social security, the better the benefits you will get. Most people’s retirement age is around 65 years old; if you can hold off until 70, you will receive the maximum benefits.
5. Not having a balanced portfolio. Are you investing all your retirement accounts into just stocks or bonds? Are you diversifying your assets enough so that if something should happen, you don’t lose it all? Make sure your retirement accounts are balanced in a variety of assets.
It is common to make retirement mistakes when you don’t have a financial planner to help you navigate through the process. Finding a great financial planner can help you avoid these and other mistakes, and ensure that you retire in style.
Don’t forget, having an estate plan in place is absolutely necessary to protecting your retirement accounts, and ensuring that the money in those accounts is distributed as desired, should something ever happen to you. Laws about how you can and can’t include retirement funds in an estate plan are getting more complex by the day. The Deliberato Law Center is one of Cleveland’s most compassion-driven estate planning and elder law firms, and we can help you navigate these waters and protect your assets. Take the opportunity to request a free consultation using the brief form below, or join us for a FREE estate planning workshop at our Independence, OH law office.
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For more information about including charitable giving in your estate plan, please contact us using the brief form below, or join us at an upcoming workshop.