Those that have a good handle on their retirement planning most often tend to be in the minority. But could that be because they’ve avoided some common super errors? The way to a successful retirement can be fraught with all sorts of pitfalls. And what’s worse, many of us fall into these traps because we think we are doing something right for our retirement.
Although many experts have claimed that paying off debt before building retirement savings is a good idea, this may cost a would-be retiree much more in the long term. This is because the majority of the money that will be available to you for retirement will be from the returns earned by saved money. Otherwise known as compound interest, the only thing that can grow it is time, which means that any delay in putting retirement money away can mean you have that much less when the time comes to retire.
Hidden Investing Costs
Although you might be putting your money into investment vehicles, it doesn’t mean that there is no cost to do this. Those managing your money will charge you fees for doing so. Looking into how much your investments are costing you can yield many surprises. Thankfully, there are many online resources which can show you just how your investments will affect your retirement savings.
Education vs. Retirement
Many put the education of their children before building their retirement savings. But experts say that while admirable, helping your children through school may not be the smartest financial decision for you. In fact, sacrificing your retirement planning to help your kids can have devastating effects on your golden years. Instead, consider searching for education financing at the lowest rates possible and remember that your children will have plenty of time to pay off any education loans.
Home Loan Management
The mortgage is a big obstacle to many trying to reduce their debt before saving for retirement. The same is true of lines of credit. Again, the longer it takes to eliminate debt, the less there will be for retirement. Taking out a second mortgage or refinancing one can lengthen the time it takes to pay off the loan. But keeping your existing mortgage can mean your home is paid for when you’re ready for retirement.
Not Investing In Other Vehicles
There is much evidence to prove that the potential returns on stocks far exceed the returns possible by investing in bonds. And yet, many are afraid to take the leap. This is usually due to the fact that stocks carry with them short-term unpredictability.
Buying a New Vehicle
Although incredibly convenient, vehicle ownership can be very costly when taxes, fuel and insurance are factored in. The same is true if you lease a vehicle. The alternative that can save you thousands is to look for private sales of older, yet reliable vehicle that you can own outright.
If you have concerns about your retirement planning, you can get free advice by downloading our eBook, or get thirty minutes of free and professional consultation when you call us.
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