By : Brooke Chaplan
Everyone has different retirement needs and goals, so there is no one-size-fits-all blueprint for how to save the right way. But there may be some clear signs you are doing things wrong, so pay attention and make sure you don’t fall into these easy traps.
You Aren’t Putting Enough into Your 401(k) Plan
How much is enough to put into your 401(k) is subjective. Since most people can’t afford to put in the maximum the government allows, how much is enough? If your company offers a match and you aren’t putting in at least enough to get the full match, then you may be missing out on free money. Re-evaluate your plan and see if you can work and add to it at all.
You Aren’t Saving in Tax-Advantaged Ways
Most financial experts advise that you pump up your emergency savings first. After that, extra money should go toward retirement. That means it should go into a tax-advantaged account such as your 401(k), or individual retirement account. If you are saving more than you need to in accounts that don’t give you a retirement-related tax break, you are losing money.
You are Paying Too Much in Fees
The fees you pay for your 401(k) and any managed accounts you have may not seem like much, but they can add up over time. A few percentage points more a year can add up to tens of thousands of dollars lost for retirement. Closely examine the fees you pay, and look for better options to reduce them.
You Aren’t Planning for Medical Care
Experts estimate that retirees can wind up paying several hundred thousand dollars in health care expenses throughout their retirement. Medicare, while it covers a lot, doesn’t cover everything, and isn’t free. You should take advantage of health savings accounts and other vehicles to save for retirement-related health expenses.
You Haven’t Planned for Long-Term Care
It’s estimated that 70 percent of people 65 and older will need long-term care at some point in their lives, yet few people plan financially for such a possibility. You should look into ways, such as long-term care insurance, or accelerated benefits riders on life insurance plans to pay for home care or other types of long-term care. Places like Queen City Home Care will also often work with individuals to make sure their specific needs are met at a cost they can afford.
You Haven’t Thought about Social Security
If you plan well and can wait until later in life to apply for Social Security, you will maximize the amount of money you will get. But you must be sure you understand the rules and map out a plan. Talk to a financial professional to make sure you are getting the best option for your situation.
Planning for retirement isn’t easy, even if you have professional help. But avoiding these six mistakes will make it go more smoothly.