Building a Future With Your Retirement Plan
Retirement planning is a critical part of securing your financial future. While there exist myriad measures to fortify your retirement savings, it’s equally vital to recognize the common missteps people tend to make when planning their golden years. This article covers these mistakes that often when retirement planning and offers insights on avoiding them. Executing a retirement plan is important regardless of your stage in life, and enlisting expert advice, like a consultation with Safe Harbor Retirement Group, can offer tailored strategies for your unique circumstances.
Insufficient Savings and Delayed Investment
An important part of a good retirement plan is figuring out the money you’ll need for a comfortable life after you retire. People often don’t realize how much compounding interest can impact retirement savings over time. Starting early helps your investments grow. For example, saving $6,000 every year with a 6% yearly return over 40 years can lead to a big retirement fund. On the other hand, delaying saving or not putting in enough money can stop you from reaching your retirement goals.
Overlooking Employer Matches
If your employer offers a 401(k) plan or a matching contribution program, taking advantage of the match is important. When you contribute the required percentage to qualify for the match, you increase your retirement savings. Think of it like a part of your compensation that can grow tax free for years. Every bit you contribute matters, and the longer you receive the employer match, the more your savings grow over time due to compounding.
Neglecting Portfolio Rebalancing
As you get older and retirement gets closer, your willingness to take risks and what you want from your investments naturally change. If you ignore adjusting your investment mix based on these changes, it can result in lower returns or missed opportunities. It’s important to review your portfolio to match how much risk you’re comfortable with and what you want financially. Rebalancing is a useful tool that many 401k providers and investment platforms offer to maintain the desired asset balance within your portfolio, which can lead to higher gains in the long term.
Inadequate Tax Planning
Many investors forget about taxes when getting planning for retirement. For many tax-deferred investment portfolios, the taxes won’t affect those funds until the money is drawn on during retirement. Given the nature of tax law and the uncertainty of what tax rates will be in 15, 20 or 30 years, it is a good idea to work with a financial advisor to create an investment strategy that includes tax-free income in retirement, which could help cut future tax burdens.
Safe Harbor Can Help Avoid These Mistakes
The best way to make sure your retirement plan is on track is to work with a trusted financial advisor. Safe Harbor Retirement Group can guide you and put an investment plan together that will help you hit your retirement goals. We offer personalized financial advice and the retirement products that will help you avoid these common mistakes. Call us at (614) 760-0670 or take advantage of our complimentary review of your retirement portfolio.