Are You Making Any of These Mistakes While Saving for Retirement?
There is no one-size-fits-all retirement plan for everyone, but there is a place where everyone should start.
With that in mind, here are 5 common mistakes you can make while saving for retirement – and what to do if you’ve found yourself in a situation where you’ve made one.
1. You Haven’t Saved Enough for Retirement
Mistake number one is that you haven’t saved enough or that you haven’t saved at all. When I first started investing, I hadn’t saved anything.
But, the money that you invest is going to make you more money than anything else in your whole life. The earlier you start, the better.
Crank down your expenses, and crank up the income. Every dollar you can get into that retirement account now is going to make a huge difference for you down the road.
2. You’re Borrowing From Your Retirement Money to Pay Expenses
Mistake number two is that you are borrowing from your retirement money to pay your expenses. You can’t do this. Spend money on only the things you need. People often make the mistake of lifestyle creep. This is what happens when you start to make more money and you buy a more expensive car, or house with it. Quit trying to impress people that you don’t like anyway.
If you’re spending out of your retirement account, it is crucial that you leave that alone. If you spend that money you’re going to get penalized by getting taxed. Neither of those things is a good idea.
3. You’re Paying Too Much Interest on Bad Debt
Mistake number three is you’re paying too much interest on bad debt.
First of all, you shouldn’t be paying very much interest right now. Interest rates are at historical lows. If you’re paying 18% interest then something very bad is happening.
Forget about investing if you have a lot of credit card debt. The first thing you have to do is get rid of that bad debt. If you could make 18% a year, you’re doubling your money every four years. You don’t want to double someone else’s money every four years.
Another kind of bad debt is when you’re borrowing money to buy junk you don’t need. Don’t be borrowing money to go to the mall. That’s mall investing, and that’s not a great idea.
Save whatever you have to pay down your bad debt as fast as you can.
4. You’re Becoming Inactive Physically and Socially
This one doesn’t have to do with money, but with your well-being. It’s easy to become inactive physically and socially. This will play a big part in your retirement years.
You’ve got to be active physically and you’ve got to be active socially. For example, there’s a retirement community down in Florida, called The Villages, which has 110,000 seniors, and what they all have in common is they’re socially interactive and they’re very physically active. They have something like 100 golf courses down there. When I went down there to play polo 3,000 people came out to watch and they all wanted to learn about the game.
Staying active and social is so important, especially in retirement.
5. You’re Not Taking Investing Seriously Enough
Mistake number five is that you’re not taking investing seriously enough. This one happens to a lot of people because they just don’t think they can do it.
Think about buying stocks like making any meaningful purchase. You’d do a ton of research before buying a new car or a new house, right? You can handle this. Investing is no different than that. When you take it seriously, it’s going to change your life.
Are you making or have you made any of these retirement mistakes? How are things going for you.