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Contact: Amanda Edmunds
I & E Insurance Agency
Common Retirement Planning Mistakes
56% of Americans have no clue how much they should be saving for retirement and roughly 1 in 5 Americans have no retirement savings whatsoever. It’s no secret that retirement planning takes years of hard work, dedication. It can be confusing and overwhelming for some. Still, don’t become a part of that percentage. Here are three of the most common retirement planning mistakes and how to correct them!
1.Underestimating Your Retirement Expenses
It’s important to accurately calculate how much you’ll spend each year in the retirement preparation stage. If you underestimate this number, you likely won’t have enough saved and you’ll risk running out of money too soon. You can’t predict exact numbers - it’s natural for there to be some unexpected expenses that crop up. However, the more accurate your estimate, the better chance you’ll have at saving enough. Create a retirement budget and map out your expected costs. Once you’ve covered all of your basic living expenses, you’ll be able to determine how much you might need to save as cushion.
2. Expecting Social Security to Cover Everything
What’s worse still is expecting that Social Security will be able to cover all of your expenses. The average Social Security check equates to about $17,000 a year, which is likely not enough. Your social security is only designed to replace about 40% of your pre-retirement income, so keep this in mind throughout the planning stages. In order to maintain your lifestyle, you likely won’t be able to solely rely on Social Security.
3. Not Saving Early Enough
It’s important to begin saving for retirement as early as possible. And with compound interest, every dollar that you save will continue growing until retirement. Make saving your number one priority. Experts suggest that 10% to 15% of your total income should go into retirement savings over your working life.
4. Not Having a Plan
Lastly, not having a plan at all is s surefire way to completely sabotage your retirement. Sit down with an expert and put together a plan based on your expected lifespan, planned retirement age, planned location, and the lifestyle you would like to lead. All of this information will ensure that you have an accurate determination of how much you need to save. From there, update your plans as you see fit based on your needs.
Looking to start a retirement plan today?
Contact I & E Insurance to speak with one of our experienced advisers!