Retirement can seem like it’s lightyears away, but the decades can creep by faster than you might suspect. As a result, it is imperative that you start planning for your retirement sooner rather than later. Here are some retirement-planning mistakes that you need to avoid at all costs!
1. Waiting
According to the American Psychological Association, finances consistently ranks as the #1 stress-inducing factor of US citizens’ lives, and this is something which is unlikely to go away with age. As a result, it is important to plan for our financial futures sooner rather than later. The key is to make decisions now that your future retired self will thank you for. Whether it’s setting up your 401k or meeting with a financial advisor to discuss savings, don’t wait to start planning for your eventual retirement safety net.
2. Being unrealistic
Making a retirement plan is difficult when you’re relatively young, as you have to make lots of assumptions about your financial future and your projected cash-flow for the next few decades. Although it’s easy to assume that you’re going to put away X amount of money every month for 30 years, there will always be unexpected expenses and costs that crop up in your life, whether it’s a new car, new house, or a yearly vacation. It’s also important to take inflation into account and consider making wise investments in order to curb this problem.
3. Forgetting about your quality of life
When talking about your future finances, it’s inevitably important to crunch the numbers and spit out some cold, hard statistics. We might want to maximize our savings over our lives and live as thriftily as possible, but is that the way you really want to live your entire life? Avoiding vacations and treats could save you a lot of money, but you could throw the best years of your life away by living like a pauper and not enjoying yourself. Be sure to allocate some money for fun and enjoyment – life is short and it should still be enjoyed to some degree!
4. Spousal disagreements
Before you start planning for retirement, be sure to talk to your spouse about your future retirement and what you envision for yourself and them too. It’s better to have these conversations early and strive toward mutual goals which you can work toward and both be happy with. If one of you wants to work until the day you die, now is the time to address this issue and ensure that you are both happy many years into the future.
5. Overlooking short-term goals
Of course, retirement is a very important aspect of your financial planning, and it is undoubtedly the one which stretches out the furthest into the future, making it seem rather daunting and omnipresent. Despite the presence of retirement looming over you when you look into your finances, it’s also important to plan for your own short-term financial and personal goals too. Short-term goals obviously depend largely on your lifestyle and future plans, but should be taken into account nonetheless.
For example, if you plan to have children in the near future, you can bet that you’re going to be making numerous shorter-term financial goals which focus on raising your children and putting money away for their college tuition in 18 years’ time. Mortgages and auto expenses are also other important short-term factors, and of course, you need to have a “rainy day fund” for things such as medical issues and crucial home improvements.
Furthermore, as mentioned previously, you need to set some money aside for enjoying yourself and having some fun in your day-to-day life! Just because you want to save up for your retirement fund doesn’t mean you can’t put some money away for that dream vacation you keep thinking about. Even if you retire wealthily, wouldn’t you prefer to look back on your life and know that you enjoyed it?
Saving up for retirement is a long-term plan which likely needs re-assessing from time to time as things change and the economy adapts. If you need help with your retirement fund and making wise decisions, why not give one of our team a call today?
