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5 all-too-common retirement mistakes

Retirement plans like IRAs and 401k's make it easy to save, but you do have to take some steps to get the full benefits.

By MSN Money Partner May 1, 2012 10:34AM

This post comes from Miranda Marquit at partner blog Bargaineering.


Image: Bundles of US one hundred dollar bills in bird © Don Farrall/Photodisc/Getty ImagesOne of the great retirement savings tools is the tax-advantaged account. Accounts like 401k's and the IRAs can help you save for retirement, and reap tax advantages at the same time. Your tax-advantaged retirement account can provide you with a great way to save up money for retirement, putting your capital to work for you and building wealth. These accounts are easy to use, and they make saving up for the future fairly simple.


However, even though tax-advantaged retirement accounts are relatively easy to manage, it is possible to make mistakes with them. As you contribute to your retirement account, here are five common retirement mistakes to avoid:


Not starting as soon as possible

The biggest mistake in any retirement savings plan is to not start as soon as possible. The earlier you start, the more time compound interest can work on your behalf. Getting started is a major part of retirement savings, and putting it off means you fall further behind. Along with this is the idea that you should max out your retirement accounts if you can. Even if you can't max out your contributions right now, you can create a plan to work up to it. (Post continues below video.)

Leaving money on the table

Another issue comes with leaving money on the table. If your employer offers a match, you should take it, up to the maximum allowed. Find out what sort of match is available, and then do what you can to contribute as much as you can in order to qualify for that matching contribution. It's free money that can go toward building your nest egg.


Withdrawing money early from your retirement account

Taking money from your retirement account early can trigger penalties and taxes. In the case of a Roth IRA, you can withdraw your contributions without penalty, but this still might not be the best idea. Even if you get a retirement account loan and the interest you repay is to yourself, withdrawing money is a bad idea. Once that money is out of your account, it is no longer working for you, and there are opportunity costs.


Failing to properly identify beneficiaries

Don't forget that your retirement account will have to go to someone if something happens to you. Make sure your beneficiaries are properly identified. If you have a major life event, you should change your beneficiaries. Many people forget to identify new beneficiaries after a death in the family, or after a divorce. It's important that you review your plan regularly and make sure that your beneficiaries are updated.

Neglecting to regularly re-evaluate your portfolio

Even though you might think that you're set, you should consider that your needs change as you near retirement. Additionally, some investments might not be working as well in your portfolio as they did. If this is the case, you will need to rebalance your portfolio, and even switch out some investments. Make sure you periodically revisit your portfolio to ensure that you are on track, and to tweak your investments if needed.


More from Bargaineering and MSN Money:

May 2, 2012 10:18AM

My top 5 retirement mistakes  


1 Elect Officials that have no regard for the American peoples intelligence.

2 Elect Officials that think they can Tax their way out of any problem.

3 Elect Officials who think they can spend their way out of any situation.

4 Elect Officials who believe printing money does not in anyway impede on the value of ever other dollar in circulation.

5 Elect Officials that believe borrowing capital is just as convenient as printing money.


No wonder no one can retire with any fuzzy feeling of security.

May 2, 2012 12:07AM

I don't have to worry about retirement mistakes...


The way things are, I'll be working until the day I die.


So will many of you, you just may not know it now.

May 2, 2012 8:27AM

If people have not heard and heeded these five things before then they have had their head in the sand for years.


Give me something NEW and REFRESHING - Like a new person from MSN with a fresh thought!

May 1, 2012 9:11PM
Help your kids or your grandchildren.  When my two grandkids were born I opened up a TD Ameritrade account for each of them and put $1000 into the accounts and named my son the guardian.  My hope is that my son does his work to invest his kids money learning from these efforts and continue to learn by maintaining the accounts.  My grandkids should get interested in investing early as they own some Disney and they love Mickey.  Imagine what may have been possible if someone did that for you.
May 1, 2012 11:14PM
Retirement mistakes… Not starting as soon as possible


They’re your headers not mine.  I couldn’t agree more. I retired at fifty six years old and I wish I had started five years earlier. It aint’ about being rich, it’s about being happy. Wall Street never did and never will have anything to do with it. I just finished a short book and I’m going scuba diving on Saturday.

May 2, 2012 10:02AM

old man 76,


Working until I die is a figure of speech.


I work at Avis and there are a lot of elderly people working part time there some close to 90 years old. In my 7 years there 5 of them worked up until weeks before they died. One died the next day. Some people don't look their age because their in good shape.


If you've never seen very old people working you've never been to McDonalds or Wal Mart.

May 1, 2012 11:45PM
This list could be doubled or tripled, there are so many factors.  Additional considerations - by far the most important -have an emergency fund so you protect yourself from hardship withdrawals in tough times.  Don't take contribution 'holidays' - once you start, keep that commitment to pay yourself first.  Don't take a loan from your account .  Regularly and aggressively increase contributions.  Most understand the tax deferred nature of most retirement savings contributions, in addition, always check to see if you qualify for a savers credit come tax time (Form 8880) too.  Don't panic when markets fall (instead, think of it as buying on sale). Did I mention - make sure you have an emergency fund? Changing employers - never cash in, instead, keep your hands clean with a trustee to trustee rollover.  Considering changing employers - weigh hanging in there to properly vest in employer contributions (free money isn't free if you have not yet vested). Watch your fees and if your plan is robust, compare fees.  Always make sure you have a liquid emergency fund.
May 2, 2012 12:11AM

Tommy T...


At the current rate of inflation, a million dollars in forty years will probably be worth less than a 100 K.


 It's better than nothing but a new car will be more than that.

May 2, 2012 1:16PM

The biggest mistake of the American people is to have voted in any politician that dipped into Social Security funds.  All the good faith repayment at near nothing return.  Congress should have then and must do now .. demand any money withdrawn from Social Security Trust Fund must be repaid at the highest possible interest rate to discourage our federal government from dipping into the safety net.

Come-on Congress .. you have the Constitutional power to tax, so don't go sneaking around the back door to steal from the poor and middle class, while letting the 1% get a free ride. 

May 1, 2012 6:13PM
The only thing that I have seen that works for a young person to use towards retirement is a 401.  Start as early as you can.  Make it a bill you must pay.  $100.00 a month until you are 60.  Start when you can start... like 18 or 19 years old..  By the time you are 60 you will be a millionaire.
May 2, 2012 10:26AM

In 1939 a dollar had the same buying power as $16.12 does today.,.. In 1957 the dollar had the same buying power as $8.12 today...

In 1970 the dollar had the same buying power as $5.99 does today.


All this is based on an average 3.99 % annual inflation rate.


Search the stats and tell us what a million dollars will be worth in 40 years. Do the math.

May 2, 2012 12:26PM

old man 76...


It sounds like you are financially secure so screw the rest of those old people. Right?


Not being smart or crooked enough to have a lot of money for retirement should not be a crime punishable by an impoverished old age. Honest working class people deserve the dignity and security of comfortable twilight years as much or more than the wealthy.


People just take your attitude to ease their concience, if they have one that is.

May 2, 2012 1:35PM


old man 76...

Good for you.


If we all lived out in the woods we wouldn't have to see the world at all...


We couldn't see the forest for the trees, so to speak.

May 2, 2012 1:55PM

old man 76..


Of course some of them don't, they're as selfish and self centered as you are.


In any case, other people don't make up my mind, I do. As for comments I suggest you look at "our" thumbs up, and down.

Go chase down some road kill or something, Isn't it about lunch time?

I'm skipping lunch, I'm going to Outback for steak and lobster for dinner.


Old guys like me have to watch our budgets, don't you know? 

May 1, 2012 5:38PM
Having to buy gasoline, having to buy gasoline, having to buy gasoline, having to buy gasoline & having to buy gasoline! And msn, quit calling this a spam, quit protecting your corrupt Republican OIL corporates, because next to the corrupt FINANCIAL corporates & their Wall Street buddies, they helped bring on the global economic fall! ALL CAPITALISTIC GREED, not spam!

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