When you think about retirement, what do you see? Maybe you see a time when you can relax and enjoy your life. Maybe you see an opportunity to travel the world. Maybe you see an endless stream of income. Whatever your vision of retirement may be, it’s important to remember that it’s not guaranteed to happen. In fact, there are a number of things that can destroy your retirement—from poor investment choices to unexpected health complications. If you want to make sure your retirement is as comfortable as possible, read on for four key points to keep in mind.
Not Saving Enough Money
One of the most important things you can do for your retirement is to save as much money as possible. But if you’re not saving enough, it’s only a matter of time before your savings are depleted and you’re forced to retire earlier than you wanted to. Here are four things that will destroy your retirement savings:
1. Not contributing enough to your 401(k) or IRA: A common mistake people make when it comes to saving for their retirement is not contributing enough money to their 401(k) or IRA. If you don’t have any money saved up in these accounts, your employer will automatically contribute a percentage of what you make, but that amount isn’t enough on its own. In order to have a secure retirement, you should aim to save at least 6-8% of your salary each year.
2. Investing in high-risk investments: Another common mistake people make when it comes to their retirement savings is investing in high-risk investments like stocks or derivatives. While these strategies may offer short-term benefits, they’re usually not worth the long-term risk. Instead, focus on low-risk investments like bonds and index funds, which will provide a steady return over time.
3. Not taking advantage of compound interest: Compound interest is one of the best ways to grow your wealth over time, and it’s something that should be taken advantage of when saving for your retirement. For example, if you start saving $100 every month, and your account has a 7% interest rate, by the time you reach retirement your savings will be worth more than $1,200!
4. Not getting help from a financial advisor: One of the best ways to save for your retirement is to get help from a financial advisor. A financial advisor can help you create a budget and identify different investment options that are best suited for your specific situation. They can also help you make sure you’re taking advantage of compound interest and other powerful strategies for saving money.
Not Diversifying Your Retirement Funds
There are a few things you can do to put your retirement funds at risk and jeopardize your future security. If you’re not diversifying your portfolio, you’re putting all of your eggs in one basket, and if that basket happens to fall apart, it could mean trouble for your retirement savings. Here are four ways to put your retirement at risk:
1. Not Saving For Retirement: If you’re not saving for retirement, you’re putting yourself at a big disadvantage. According to the Employee Benefit Research Institute (EBRI), almost half of Americans don’t have any money saved up for their golden years, and those who do have only about half of what they need. A study by Fidelity Investments found that people who had saved for retirement were almost three times as likely to live past 90 than those who didn’t save anything at all.
2. Investing In Risky Assets: One of the biggest mistakes people make when it comes to their retirement is investing in risky assets like stocks and bonds instead of safe ones like CD’s and savings accounts. These types of investments tend to fluctuate in value over time, which can lead to big losses if the market crashes. Instead of risking everything on Wall Street, invest in low-risk investments like bonds and CD’s that will provide stability for your retirement savings.
3. Ignoring Your expenses: Another thing you should consider when saving for retirement is how much money you’ll need each month just to cover your basic expenses. If you ignore your expenses and put everything into your retirement account, you could end up shortchanging yourself in the long run.
4. Not Controlling Your Spending: Finally, one of the biggest factors that can damage your retirement savings is uncontrolled spending. If you’re not careful with your money, you could end up blowing all of your savings on unnecessary expenses. Make sure to set aside money each month to cover unexpected costs so you don’t have to worry about finances when you’re retired.
Not Preparing for a Retirement Crisis
There are a lot of people out there who are not prepared for a retirement crisis. They think that they will be able to just retire when they reach a certain age and have enough money saved up. Unfortunately, this isn’t always the case. There are a lot of things that can happen in retirement that can destroy your savings, including:
-Pension plans going bust: A lot of people rely on their pension plans to provide them with a significant amount of income during retirement. However, if the pension plan goes Bust, these incomes could be gone forever. This is especially true if the pension plan was set up under conditions where the company was likely to go bankrupt in future years.
-Reduced Social Security benefits: The social security program is one of many retirees’ main income sources. However, if economic conditions change and wages stop growing faster than inflation, social security benefits may be reduced. This could potentially mean a decrease in income by as much as 50%.
-Events beyond your control: If something bad happens (like an earthquake), it can damage or destroy property and disrupt everyday life in ways that you couldn’t possibly have predicted or planned for. This can dramatically reduce your standard of living and leave you without any reliable source of income.
Failing to Make Adjustments As Retirement Nears
Retirement is a time of rest and relaxation, but it can also be a time when your financial security is at risk. Here are five things to watch out for as you approach retirement:
1. Failing to Make Adjustments As Retirement Nears. If you’ve been making the same monthly payments into your retirement account for years, you may not have saved enough money. Once you reach age 70 1/2, your Social Security benefits will start to decline, so it’s important to start saving early and make adjustments as needed.
2. Not Reviewing Your Insurance Options. Assuming that you have some form of retirement savings plan in place, make sure that you are fully aware of your insurance options—including life insurance and disability insurance—in case something happens during retirement that causes you to need those funds.
3. Overspending on Regular Expenses. It’s easy to get carried away with regular expenses such as grocery bills and cable TV bills when you don’t have to worry about money during retirement but remember that those costs will add up over time if left unchecked.
4. Not Maintaining Proper Tax Planning. Unless you have unique circumstances, it’s always wise to review your tax situation periodically in order to ensure that you are taking the appropriate steps for protecting your assets in retirement (such as arranging for 401(k) contributions).
5. Ignoring Estate Planning. One of the biggest risks during retirement is not having a plan in place for the disposal of your assets should you die before you reach the age of 70 1/2. If you have any questions about whether or not you need to consider estate planning, speak with an experienced advisor.
Final Thoughts
Here are four things that can destroy your retirement: living beyond your means, not planning for retirement, failing to save for retirement, and not having a realistic understanding of how much money you will need to retire comfortably. If any of these sounds familiar to you, it’s time to sit down and start making some changes. Don’t wait until it’s too late – start working on plans today so you can enjoy your retirement years in the fullest possible way.
