The retirement of your dreams usually isn’t the smoothest ride to begin with, but there are some common mistakes that can deter you more than expected. Here are 10 of the mistakes that we see the most that you should be avoiding.                                         

No Retirement Plan

Your retirement dreams are simply that without a plan to reach them. Your expected lifespan, health, lifestyle, retirement age and location, as well as your current situation are all factored into creating your custom retirement plan.  A financial planner works with you to gather this data in order to help plan what you should save and how you should invest for your goals. Without this plan, your retirement dreams may very well be altered.

Not Maximizing Tax-Deferred Savings

Whether your company offers a 401k, SEP or Simple IRA, it’s important you understand the terms of your plan. Most companies will match up to a certain percentage, meaning you can contribute pre-tax, thus reducing your taxable income while getting extra contributions from your company. By not matching your employer’s contributions, you are leaving money on the table in more ways than one.

Not Holding Yourself Accountable

Part of having a financial plan means sticking to it. Everyone will have things that ultimately arise during the course of your life like needing a new roof, a car accident or a large medical bill. However, those things are taken into account and factored into your plan more easily if you’re sticking to your savings and spending goals. Create a budget for yourself and then stick to it to ensure the moments you need your money the most, you have it.

Prioritizing Other Savings

While your personal savings are an important part of your financial plan, oftentimes people may skim off their retirement savings to prioritize vacation savings or even a new car purchase. More often, we see individuals with children who prioritize college savings. If you can avoid it, you should contribute to your retirement as planned and try to save extra elsewhere. After all, you can get grants and loans for college but you can’t get one for retirement.

Relying on Social Security Alone

Social Security is often thought of as the cornerstone to any retirement plan. This steady stream of monthly benefits is usually at the core of your retirement income, but it shouldn’t be your only retirement income. To most, though, Social Security is a big difference in your usual paycheck. Pensions, IRA’s, 401(k)’s and other savings, or even a part-time job are oftentimes necessary to your retirement plan. Going through life thinking Social Security is enough may ultimately leave you with little other income and a need to let go of some of your retirement goals.

Not Planning for Health Care Costs

Similar to Social Security, Medicare may not be enough in retirement. Medicare may not cover all of your costs and some deductibles may still need to be met. With many variables, it’s important that you and your financial planner sit down to discuss numbers in order to best save for any unexpected medical costs in the future.

No Diversification

Portfolio diversification is one of the main things that allow an individual to better withstand the market highs and lows. For something as long term as retirement savings, this is incredibly important. As you move along in life, your allocations may change but your diversification in stocks, bonds, equities and other investments should remain. 

Retiring With Debt

Retiring with some debt may not be the worst thing but if your debt is excessive pre-retirement, it may ultimately grow worse after. To avoid potentially sacrificing your retirement dreams, come up with a debt spend down plan with your financial planner. Sometimes even just consolidating or refinancing is the answer you need.

Not Rebalancing Your Portfolio

At the very least, you should be rebalancing your portfolio to meet your needs annually. As the market or you go through changes, its important to evaluate your portfolio to ensure its meeting your most up to date needs especially as you approach retirement and may want to cut back on your risk.

Being Too Scared To Spend

It’s your retirement. You’ve worked your whole life to enjoy yourself in a work and anxiety free environment, so enjoy it. Many people find themselves with plenty saved but too scared to withdrawal and enjoy it. If you planned properly, you don’t have to feel the fear of spending your money.                                         

Written By: Peter Gutekunst, Financial Planner

Opinions expressed in this blog post are those of the author and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Diversification and asset allocation do not ensure a profit to protect against a loss. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. Matching contributions from your employer may be subject to a vesting schedule. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.