Regardless of where you are in your career, retirement should be on your mind in some capacity. If you want to put yourself in the best position possible, you will want to do plenty of planning and research, especially when it comes to retirement. Keep reading to understand some of the most common retirement planning mistakes people make and how to avoid them.
Dipping Into Your Fund Early
The first common mistake people will make is an obvious one: dipping into your retirement fund too early. If you withdraw money from your retirement savings before you’re eligible, not only are you taking away from all the money you had saved for retirement, but you may also face some penalties that will further take away from your savings.
Not Maxing Out on the Company Match
If you have a good job with great benefits, your employer will often match a percentage of your 401(k) contributions. A huge mistake people make is not taking advantage of the highest they are willing to go. This is free money, so contributing enough to your 401(k) to take full advantage of that match is one of the best things you can do for retirement.
Poor Investments
A key component of retirement is investing, and if you don’t do so wisely, it can result in some serious damage. To invest smartly, you may want to go with index mutual funds or low-fee exchange-traded funds. However, many people will also choose a self-directed IRA. This option, with advice from a financial expert to make the right investments, tends to offer you more freedom.
Adding More Debt
Debt is often inevitable, but you still must remain conscious about how much you are accumulating before retirement. As we stated before, you don’t want to dip into your retirement fund to pay it off. Having too much debt on your plate can keep you from retiring, so do your best to pay it off or pay it down.
Filing for Social Security Right Away
Many people also take Social Security seriously, and filing for it too early is the final most common retirement planning mistakes you should be aware of. Taking early retirement results in a lower payout, so when it comes to Social Security, it’s best to wait until your official eligibility date, typically around 70, so you can get the most from it.