Believe it or not, you may be the biggest threat to a comfortable retirement. Below are several ways in which you can ruin your own retirement.
Failing to plan almost guarantees that you'll experience some sort of financial struggle once you're retired. By not taking all of the necessary steps to ensure that your needs will be met, you run the risk that they won't be.
Planning for your retirement doesn't need to be a daunting or difficult process. Check with your employer to see what options they offer and select a plan that will work best for you. Additionally, look into individual retirement options and accounts, being sure to select those with low to no risk.
Failing to protect your assets is a common mistake, especially for those who don't feel as if they truly have anything worth protecting. The truth is though that everyone needs some form of asset protection.
Basic asset protection will be discussed at length in other posts, for now suffice it to say that it's not something that you should neglect as the consequences can be disastrous.
Spoiling yourself or your loved ones can be incredibly tempting once you retire. Not having to work you have much more time to spend with your family and many more opportunities to spend your money. Taking up an expensive hobby, traveling extensively or splurging on shopping trips can be fun but they can also be the beginning of major financial issues that you realistically may not be able to fully recover from.
You don't have to deny yourself or those you care about new things or new experiences but be realistic about your budget and plan accordingly. You may not be able to take several international trips a year but it may be perfectly feasible for you to take one a year. Similarly, you may not be able to buy each of your grandchildren a new car but it could be possible to provide them all with a safe used car. The key here is to truly consider what's important to you and to temper that against what's financially possible.
Relying solely or primarily on funds other than those on a structured retirement account is one surefire way to find yourself scrambling. Consider that if you're expecting an inheritance or settlement that they may be smaller than you previously imagined and that investments can go sour.
There's nothing wrong with looking at a variety of ways to save for your retirement, in fact it may be best if you don't rely on a single account for all of your needs. In this vein you may want to buy some stock or look at other ways of investing some of your money into projects you believe can be prosperous. However, you don't want to rely on these methods to provide all, or even most, of the funds that you'll need to retire.
Taking early Social Security benefits may seem like a good idea if you retire early especially since it's possible to start collecting as early as age 62. The problem with this though is that in collecting early, you're likely locking in a lower monthly payment for the rest of your life which means that you'll have to rely more heavily on other retirement savings.
Retirement savings by their designation meant to be spent to cover your costs once you've retired, however they can also be included as a part of your estate. Noting this, if you spend less of your retirement funds, you have more money to leave to your beneficiaries. This doesn't mean that you should deprive yourself of anything just to ensure there'll be money left over but knowing this may encourage different financial choices on your part.
When should I start planning?
You should start planning yesterday. In that vein, you should look into potentially starting retirement funds for your children. These possibilities exist and should be explored. If you get the kids started early then they will get a head start toward retirement and will learn early the value of advanced planning. Even if you haven't actually started saving yet it's still possible that you have a feasible retirement plan of some sort. Maybe you're in your early twenties and are about to start your first post collegiate job or maybe you're in your forties and are restarting financially after taking a few hits with investments. Please know that these are not the worst case scenarios. The worst case scenario would be not thinking about a plan at all.
Taking the next step
If you don't already have money set aside or are worried that what you have isn't going to grow into enough by the time you retire then you need to seriously start preparing for and protecting your future. The Presser Law Firm can help by working with your financial advisor and tax advisor to get you started on a well-rounded estate plan for your future.