We have a lot of choices about where to invest our money, both before and after retirement. Some options are clearly bad investments. Others seem like a good bet, but they probably aren’t.
While we would all like to find a shortcut to massive wealth, a more steady approach is probably the best route to a secure retirement. Save early and regularly, and invest surely. Here are five mistakes retirees make, curated by best online slots real money.
1. Quitting Your Job
The average worker changes jobs about a dozen times during their career. Many do so without realizing they are leaving money on the table in the form of employer contributions to their 401(k) plan, profit-sharing, or stock options. It all has to do with vesting, which means that you don’t have full ownership of the funds or stock that your employer “matches” until you have been employed for a set period (often five years). Don’t decide to leave without seeing what your vesting situation is, especially if you’re close to the deadline. Consider whether leaving those funds on the table is worth the job change.
2. Not Saving Now
Thanks to compound interest, every dollar you save now will continue growing until you retire. There is no better friend to compound interest than time. The longer your money accumulates, the better. Examples of “spend now, save later” include remodeling or adding on to a home you will only live in for a few years or financially supporting adult children.
3. Not Having a Financial Plan
To avoid sabotaging your retirement and running out of money, create a plan that considers your expected lifespan, planned retirement age, retirement location, general health, and the lifestyle you would like to lead before deciding on how much to set aside. Update your plan regularly as your needs and lifestyle change. Seek the advice of a credentialed financial planner to ensure your plan makes sense for you, courtesy of best payout online casinos.
4. Not Maxing out a Company Match
If your company offers a 401(k), sign up and maximize the amount you contribute to take advantage of the entire employer match if available. The match is typically a percentage of your salary. For example, if you contribute 6% of your salary, your employer might match 3%. If your company has a generous, matching program, it’s free money. The IRS has established a maximum for total contributions to an employee’s retirement plan from both the employee and employer. In 2021, the total contribution cannot exceed $58,000—or $64,500 for those aged 50 and over with the $6,500 catch-up contribution. In 2022, the total contribution limit is $61,000 or $67,500, including catch-up contributions.
5. Forgetting about inflation
If you’re not saving or have most investments in risk-free assets such as bank accounts or CDs, you’ll want to outpace inflation, because it can eat your retirement plans alive. Inflation is the gradual (and sometimes not so gradual) increase in prices over time. That $4 gallon of milk will likely cost much more in a few decades when you retire. So when you’re thinking about retirement planning, you want to ensure that you’re maintaining your purchasing power, or outpacing inflation.
