July 29, 2013

On the Rocky Road to Retirement: 5 Major Pitfalls to Avoid

Filed under: retirement — seniorlivingguide @ 1:48 pm

Courtesy of Brooke Chaplan [brookechaplan@gmail.com]

Nobody wants to have to work until the day they croak. You should be able to enjoy your later years without having to worry about finances. Planning for retirement is extremely important, and here are five predicaments that you want to steer clear of.

1) Not saving now
The biggest mistake that you can make about your retirement is failing to start saving money right now. Some people like saying that they’ll put money aside but don’t actually start until it’s too late. The smartest course of action to take would be to deposit a small percentage of every paycheck into a savings account or individual retirement account. Not only does this method guarantee that you will have some funds to enjoy your later years, it also teaches you that patience pays off because you will earn a bit of extra profit from your bank annually.

2) Not saving enough
The consequence of not saving now is not being able to save enough by the time you are retired. If you’ve already looked into retirement, you probably know that it can be pretty expensive. Retirement gurus concur that it’ll take anywhere from 70% to 90% of your pre-retirement earnings to continue living at those same standards when you’ve quit working. Some people can still be comfortable living more frugally, but you On the Rocky Road to Retirement 5 Major Pitfalls to Avoidget the idea.

3) Withdrawing from the retirement fund early
The number one rule of having a retirement account is to leave it alone. Using money from the account before your retirement is a big no-no. You will lose principal and interest, and your tax benefits could also be lost or reduced. If you’re unlucky, your bank will also charge you a penalty fee for every premature withdrawal.

4) Forgetting to write your living will
Planning your retirement isn’t only about taking care of financial matters. You also need to think ahead about the well-being of your loved ones in case the worst happens. Many people wonder, “Do I need a living will?” If you want to be considerate to your loved ones, yes you do. When you are no longer capable of making medical decisions for yourself after suffering from some horrible health problem, you wouldn’t want your family to have to decide whether or not to take you off of life-support, right? State your plans in writing beforehand so that your loved ones won’t have to make such heart-wrenching decisions. Visit FindLegalForms.com for more information about living wills.

5) Neglecting to inquire about Social Security benefits
Social Security can really be of help when you retire. In fact, you can receive nearly half of what you used to earn before retirement. Contact the Social Security Administration if you have any questions or concerns about your retirement benefits.

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