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Mistakes that can ruin your retirement

Preparing for retirement is a tricky, but an incredibly important endeavor. If you pile on some common and avoidable mistakes, it only gets more complicated and challenging. To help you avoid these errors, here are some of the top mistakes that can ruin your retirement.

  1. Having no strategy
    Without a doubt, not having a retirement strategy is the biggest mistake you can make. Without a strategy, you will easily get lost and have no way of knowing if or when you’re ready to retire. Developing a strategy, whether it be through independent research or working with a financial advisor, will greatly increase your chances of success.
  2. Frequent or panicked trading
    One of the easiest ways to lose money or stunt your investment’s growth is to trade often, chasing down new and exciting opportunities. This goes hand-in-hand with panicked trading during the market’s ups and downs. It is very hard to accurately time the market, leaving you with an abundance of chances to fail along the way. The best thing you can do is stick to an asset allocation strategy that properly reflects your goals, time horizon, and risk tolerance.
  3. Failing to maximize tax-deferred savings
    There are several ways to maximize tax-deferred savings, with the easiest being your employer’s 401k plan. Not participating in your employer’s 401k is a mistake; you’d be passing up the employer-matching contributions. In other words, you’d be passing up free money.
  4. Prioritizing college funds
    Your kid’s education is always important, though not as important as your own retirement. If money is tight, you should prioritize your savings over a college fund. You can get loans, grants and scholarships for college, but you can’t for retirement.
  5. Unexpected healthcare costs
    Preparing for retirement isn’t as simple as saving your money in various retirement accounts. Failing to prepare for life’s unexpected events, like sudden healthcare costs, will inevitably set you back. It’s best to prepare for retirement while setting money aside for emergencies.
  6. Retiring with a lot of debt
    Too much debt is bad enough when you’re actively making money. Seeing that you won’t have a great income in retirement, too much debt can be deadly. Be sure to reduce your debt before you retire.
  7. Never changing your investment approach
    The stock market and state of the economy is never static. The last thing you need before retirement is a sharp fall in your retirement portfolio during a bear market. Adjusting your asset allocation depending on the state of the market can be such a big help in preventing this or at least preparing for it.