Saving for retirement can be quite daunting, so it’s important to make it as easy as possible for yourself. One way to do that? Be aware of common pitfalls. Here are some of the more common retirement savings mistakes seen by financial advisors.
Keeping The Details Vague
Believe it or not, one of the most common retirement savings mistakes advisors encounter is people relying on a vague idea of a plan. Retirement saving is vital to providing financial security during your post-work years. That means you should have a concrete, written-out plan, not just some idea floating around in your head.
Paying Too Much
While most retirement accounts come with fees, there’s no need to pay an arm and a leg. As USA Today reports, search for low or free trading commissions, and try investing in low-cost exchange-traded funds or index mutual funds.
Withdrawing Too Early
If it all possible, don’t withdraw funds from your accounts too early — as in before you’re of retirement age. If you do, you could end up paying heaps of taxes and fees. For example, dipping into a 401(k) prior to age 59 1/2 comes with a 10 percent penalty and you’ll pay income taxes as well. That could be a giant chunk of change, depending on your tax bracket.
Not Risking Enough
Sometimes people saving for retirement fail to take on enough risk to ensure their savings reach max potential. Experts typically say that if you have at least five years before you’ll need that money, you can afford to take at least some risk and ride out the ups and downs of the market.