The 7 Most Common Mistakes Made When Planning for Retirement

Mistake #1 – Not taking the time to plan for Retirement.

This includes what retirement should look like in terms of lifestyle; visits to the grandchildren, leisure travel, daily and special activities, etc.?  Next, what lifestyle needs will cost, including inflation to fund this lifestyle to life expectancy.

  • Solution: Read as much as possible and meet with a professional advisor.  This could be your financial advisor, financial strategist, a financial planner, or your CPA.  Remember, your retirement will last longer than any vacation you will ever take, so it needs to be planned far in advance.

Mistake #2 – Not monitoring progress to stay on track.

Many people write their goals, put them away and never look at them.  This is a mistake because what is focused on becomes real and what is not fades away.

  • Solution:  Make yourself review your progress at least annually.  Semi annually or quarterly is better.  This gives positive reinforcement and makes you feel good.

Mistake #3 – Not starting soon enough, procrastination.

Thinking that you will get around to it someday can become too late or never.  It is never too early to talk to your future person and ask about their needs.  Visualization and questions are important.

  • Solution:  The past is dead.  If you did not do it in the past, then today is the day.  Action, movement and positive activity can conquer procrastination.

Mistake #4 – Not taking advantage of tax deductions.

Tax laws provide many ways to provide for future savings.  It is a fun puzzle.  There are clues that will provide for a brighter future.

  • Solution:  Study the tax laws as they relate to Retirement & Pension planning.  You will find many tax deductions that will jump-start your retirement plan.  Using the tax code in your favor is like the IRS offering a helping hand.  “I am the IRS and I am here to help you”.  The joke is this is a true statement.

Mistake #5 – Not taking advantage of tax deferral.

It is actually a combination of tax deferral and tax free that provides the greatest velocity for money growth.  Learn to apply the principals of Leverage and Arbitrage, which will be discussed in future postings.

  • Solution:  Paying taxes on your nest egg as it grows ends up with a smaller nest egg.  Why not pat taxes as far into the futures as possible, so your money grows and grows and grows until you need it?  Irving says, “Everything else being equal, a larger retirement fund is better than a smaller one”.

Mistake #6 – Not paying yourself first.

Too many of us pay everyone else before we pay ourselves.  How do we pay ourselves first?  We must set up programs that are automatic.  If we need to think about saving every month, it will never be consistent.

  • Solution:  Automatic saving is like tithing.  Take 10% of your income off the top and put it into a retirement plan.  This happens before you pay other bills and expenses.  This is simple, but not easy.  It takes planning and discipline.  Millionaires do it routinely, would you like to retire with millions?

Mistake #7 – Listening to everyone else who has not planned for retirement and their excuses.

It’s too early, it’s too late, it costs too much, my company is not big enough, on and on.

  • Solution:  Do not listen to those people.  After all, what do they know?  What does their retirement plan look like?  If they can show you their successful retirement plan, ask how they did it, if not use solutions one to six.

October 8, 2009  Tags: , , , , , , , , ,   Posted in: Retirement

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