Avoid These Three Mistakes When It Comes To Saving For Retirement
If you are still relatively young, retirement is probably not something you've spent a lot of time thinking about. But the truth is, the sooner you start planning for your retirement, the better chance you'll have of living comfortably when you reach that age. That said, a successful retirement plan is about more than just throwing a few dollars into a savings account every once in a while. If you want to get on the right track for your financial future, make sure you avoid these three mistakes.
Not Bothering to Set a Goal
If you want to get serious about your retirement, you need to do more than just verbalize your new outlook to yourself. For best results, you want to calculate how much money you might actually need when you get older and set a specific goal to work towards. If you don't have any experience doing this, a retirement planning services firm may be able to help. It's much easier to stay focused on your retirement savings if you have an actual goal in mind that you can use to track your progress from month to month.
Putting It Off Until Next Month or Next Year
Sure, things might be a little tight for you financially right now or you might still be in your 20s and think that saving for retirement is something you can do when you get a little older. But by putting off the start of your retirement fund, you might be giving up a lot more money than just the small amount you have to invest right now. Thanks to the power of compound interest, even $20 deposited into an investment account at age 25 will be worth much, much more than that at age 65, assuming even a modest annual return. Stop delaying and get to work now, even if you don't have a ton of money to deposit into an account.
Not Contributing to Your Company's 401K Plan
While a good financial advisor can help you set up an individual retirement account to start investing, you should check and see if the company you work for currently offers a 401K plan. Some employers actually match the money you deposit into such an account up to a certain percentage. If you are not depositing anything into your 401K at work, you could be leaving what is essentially free money on the table.
Even if your retirement is decades away, it's never too soon to start saving money. Contact a retirement planning advisor for more information and be prepared to set a goal that you can work towards from month to month. At the very least, check in with your employer and make sure you are taking full advantage of the company's 401K program, including any match the company offers on deposits.