7 Mistakes that Can Upend Your Retirement Planning

Retirement planning is hard enough without extra missteps along the way. Some challenges are unavoidable, but others are simply common mistakes that can quietly derail even a solid plan.

Let’s walk through the seven retirement planning mistakes we see most often, and what you can do to avoid them. 

1) No Strategy

Yes, the biggest mistake is having no retirement strategy at all. Without a clear strategy, you may have no goals, leaving you no way of knowing how you’ll get there or if you’ve even arrived. Creating a strategy may increase your potential for success, both before and after retirement.

2) Frequent Trading

Chasing “hot” investments often leads to despair in the long run. No two people should have the same investment ‘recipe’. What works for one person might not work for another person. But a good rule of thumb is to create an asset allocation strategy that’s diversified to reflect your objectives, risk tolerance, and time horizon, then adjust based on changes in your personal situation, not due to market ups and downs.

3) Not Maximizing Tax-Deferred Savings

If your employer has a 401(k) or 403(b) and you’re not taking advantage of it, you are missing out on extremely valuable saving opportunities. This is especially true when you’re passing up free money in the form of employer-matching contributions. To check if your 401(k) strategy is on the right track, download our guide on 10 Common 401(k) Mistakes Guide and How to Avoid Them.

4) Prioritizing College Funding over Retirement

Helping provide for a child’s college education is a gift that not all people can afford to provide. Luckily there are many ways that you can support your children as they grow into adulthood without sacrificing your retirement. Remember, you can get loans and grants for college, but you can’t for your retirement. We dive deeper into this topic here: Helping Your Kids Without Hurting Your Retirement.

5) Overlooking Healthcare Costs

No one can predict the future – especially when it comes to your own health and longevity. According to a study by the Center for Retirement Research at Boston College, 80% of 65-year-olds will need some form of long-term care at some point, yet only 3% of Americans have long-term care insurance. Extended care may be an expense that can undermine your financial strategy for retirement if you don’t prepare for it, so it is important to weigh your factors to help you decide.

6) Not Adjusting Your Investment Approach Well Before Retirement

The last thing your retirement portfolio can afford is a sharp fall in stock prices and a sustained bear market when you’re ready to stop working. Like the ‘Frequent Trading’ mistake, it is important to consider your asset allocation well in advance of tapping your savings so you’re not selling stocks when prices are depressed.

7) Retiring with Too Much Debt

If too much debt is bad when you’re making money, it can be detrimental when you’re living in retirement. Of course, not all debt is bad, like a mortgage. But working with a financial adviser can be a great way to create a plan to reduce your debt level before you retire.

How You Can Get Back and Stay on Course

If you are thinking, “I’ve made one of these mistakes,” that’s okay! The path to retirement is not always perfect or linear. It’s about recognizing where you can improve and course-correct.
Equipping yourself with the right resources, such as a certified financial adviser, can help you stay on course with experienced guidance and built-in accountability.

If you would like to get connected with an adviser at Advance Capital Management, we are ready to talk! Click here to request a complimentary, no-obligation conversation with us.