While we all want to “retire” as soon as possible, planning to pay for our golden years is relegated to the back burner of our daily lives.  When you do spend a few moments on your retirement planning, make sure you avoid these pitfalls that could leave your retirement fund balance with far less than your goal.

1. Failing to Save Early

What younger workers often fail to realize is that starting a retirement fund early can prevent them from having to save a lot in the future.  A retirement fund started at 25 compared to 35 years of age can mean a compounded interest difference of tens and possibly hundreds of thousands of dollars at retirement.  Saving early, even just fifty dollars a month, can result in an outstanding retirement fund balance.

2. Failing to Save for Your Goals

To accurately create your retirement plan, you need to know what you want to do while you are retired.  Do you want to travel?  Live on a sailboat?  Or maybe just have a nice house close to the grandkids?  Planning your retirement can help determine how much you need to save, especially if you started saving later in life.  If you want a substantial retirement fund but only began saving at age 45, you have to put away much more per month to achieve your retirement goals. 

In addition, remember that Americans’ life expectancy continues to rise.  Be sure to plan your retirement for sufficient age expectancy. 

3. Depending on Just One Retirement Savings Option

Your 401(k) or IRA has investment options, all of which you have some amount of control.  You have the power to choose which mutual funds, stocks, or other options to place your retirement funds for growth.   Be wise in diversifying your options so that you don’t put all your proverbial eggs in one basket.  Aggressive investing with high yield options at a young age can reap big rewards over decades.  However, a person closer to retirement age may want to retain conservative investment options to maintain a healthy retirement fund balance.

4. Ignoring Your Tax Implications

Uncle Sam has created a number of tax breaks for your retirement savings.  Take advantage!  Use the free money that your employer will contribute to a 401(k) retirement fund.  Save as much as you can from each paycheck and save paying income tax now.  However, also beware of high penalties and taxes for an early withdrawal of retirement funds.

5. Doing it all Alone

Remember that you are not alone when it comes to retirement planning.  Enlist the help of a retirement professional at www.iamllc.biz or planning expert at www.kenhimmler.com

 Having help understanding risks and implications of retirement saving can give you more confidence in your retirement planning.  Professional advice can give you a gentle nudge in the right direction and even provide some disciplined action goals to keep you on track.  

Authored by Ken Himmler, Sr.