Planning for retirement can be one of the most rewarding experiences in your life. You create a vision, and then you work diligently to make it happen, usually with the help of experts like Robert Nico Martinelli and other retirement specialists. However, sometimes we make mistakes that may interfere with your ability to live the life you’ve envisioned for yourself during your later years.
Admittedly, not everyone can do everything right all of the time; we’re only human after all. Unfortunately, though, some of the most common financial mistakes that we make can end up costing us a small fortune over time and may even jeopardize our long-term goals, such as retirement.
Hopefully, this list will help you avoid those pitfalls so that you can retire happy instead of being stressed out about money:
Retirement Mistake #1 – Not Saving
Surprisingly, many people don’t save for retirement. Their reasoning is that they feel it’s too far away, and by the time they reach their golden years, the money will just magically appear in their checking account, with interest, of course. Unfortunately, this doesn’t happen.
The sooner you start saving, the better. Most experts recommend starting as early as possible because this allows your money to grow through time and compound interest. Compounding is when you earn interest on both your principal and previously earned interest. This can make a significant difference in your savings over time.
Retirement Mistake #2 – Not Having an Emergency Fund
Many people rely on credit cards to pay for those unexpected expenses such as medical bills and car repairs. This is a big mistake because you’ll eventually have to pay those costs back plus interest, which can add up quickly and throw you off track of saving for retirement.
Instead of using your credit card, it’s much wiser to save for emergencies. Experts recommend that you set aside 3-6 months worth of living expenses if you lose your job unexpectedly or face another similar situation where the income stops coming in.
Retirement Mistake #3 – Being Unrealistic with Your Retirement Age
Planning to live off Social Security or pension plans alone probably isn’t realistic, especially since most people stop working full-time by age 65. The money you have saved in your retirement account won’t be enough to sustain you throughout the rest of your life, especially if you plan on retiring before age 70.
Experts recommend that a more realistic approach is to work a few more years and continue saving since living off of only Social Security alone probably isn’t going to cut it when your 80s roll around. Even when you’re old and gray, there’s no reason not to keep working part-time or doing some type of enjoyable work that will add value to society.
Retirement Mistake #4 – Not Saving Enough Money for Your Children’s Education
Some people think it’s smarter not to save up for their children’s college education so they’ll get aid instead, but this is a big mistake. By the time those students graduate from college, they will have accumulated so much student debt that they won’t be able to do much with it, let alone be able to help you out financially.
Saving for your children’s education is a great idea because most colleges require students to pay at least part of their tuition before any aid money is awarded. Unfortunately, not all parents can afford to pay for college by themselves and end up relying on loans that often take decades to pay off.