Even if you have been planning your retirement for years, you may not actually be ready. Not only are people living longer these days, but they are also far more active during their retirement years. And more activity often means more money.
But if you take a few steps now to avoid some of the most common mistakes people make when planning for retirement, you could avoid financial disaster in your later years.
- Understand That It’s Never Too Late – No matter how old you are, it is never too late to start planning for retirement. One of the biggest mistakes that people make is thinking once they are in their 50s or 60s, it’s too late to do anything about funding their retirement. But this couldn’t be further from the truth. With IRA accounts, a 401k, and annuities, your investments can grow much faster than what you might think. If you start now, you will certainly have more money than if you do nothing at all.
- You May Live Longer – Don’t underestimate how long you might live. Although it is true that some people will pass away long before they go through their retirement savings, the average life expectancy is increasing all of the time. In the past, most people didn’t think they would live past 75, but today the average life expectancy is closer to 80, and for women it is even longer.
- Consider Inflation – What you think might be a good amount of money to retire with may not be sufficient by the time you actually make the leap if you take inflation into account. Don’t just rely on savings; you will want to put some money into investments that have a good potential for growth.
- Other Financial Goals – Everyone has financial goals that don’t include retirement, such as buying a home or putting their children through college; the mistake is in putting those goals ahead of retirement. Saving for retirement only works if you actually start saving. Putting your retirement on the backburner is just asking for trouble later.