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.
This post comes from Miranda Marquit at partner blog Bargaineering.
One 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:
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.
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.
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!
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.
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.
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.
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.
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.
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.
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.
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?
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