Avoid these financial mistakes

When it comes to planning for retirement, you want to make sure you are prepared to live out your later years in the style you desire. Getting there isn’t always easy and is going to require some financial planning. While you’re working on your retirement plan, be careful not to make these common financial mistakes.

Have a Plan

One of the biggest financial mistakes is not taking the time to do any retirement planning. A retirement plan needs to be established with income from investments in addition to Social Security. Even if you have a pension, you still should prepare a plan for your retirement. That way if you come across any obstacles, you have a plan in place to help you overcome them.

Factor in Inflation

Inflation is always in flux. That’s evident from how much $20 would have bought you 10 years ago compared to what it buys you now. There’s no way to know what your money will be worth in the future, which is why you should save more than you think you need. If you don’t, you could end up running out of money.

Don't withdraw from retirement accounts

Stay Out of Retirement Accounts

Many people see the balance in their IRA or 401(k) and decide to take a loan against it. They might need the money for a home loan, educational expenses, or for various other reasons. If you can avoid it, leave the money in these accounts alone. The longer it stays there, the more compound interest accumulates. Plus, there can be various fees involved with borrowing against retirement accounts, which can cause balances to dwindle quickly.

Don’t Get Emotional

In today’s day and age, many people make the mistake of buying stock based on recent performance. The market can go down at any time. When it does, people tend to panic and unload their stock at a low rate of return. Low rates of return are not the best way to build a retirement portfolio. This is why it’s best to choose the slow and steady stocks. They don’t look like big performers, but over a 30-year period it can result in gains of 10 percent or more per year.

Take the 401(k) Match

Almost every company offers a 401(k) plan, though not everyone takes advantage of it. In fact, many companies will match deposits up to 6 or 7 percent. This means the company is going to give you free money toward your retirement. Find out what the match is and be sure to put in at least that amount so that it can help to establish a retirement account quickly.

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Make Sure You Save Money

Many people make the mistake of assuming money is going to be there when they are ready to retire, so they don’t take steps to save money in the meantime. You should always be saving, regardless of the safeguards you have in place. If you’re not sure how to save for retirement, a financial planner from Hovis & Associates can help. We can recommend various financial services and help with various forms of insurance as well.

We have been helping people prepare for their future for more than 30 years, and we look forward to being able to do the same for you. Contact us today to get started.