You’ve worked hard and saved diligently, but a comfortable retirement still isn’t guaranteed. Longer lifespans, rising costs and unexpected setbacks can throw even the best-laid plans off track.
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To retire securely (and maybe even early), it’s essential to recognize and avoid these 14 common pitfalls.
Helping your grown kids out is generous and understandable, but if it comes at the cost of your own future, think twice. Teach independence early. Your retirement should come first.
A large home might hold sentimental value, but the maintenance, taxes and mortgage can eat into retirement savings. Downsizing can free up funds and reduce stress.
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According to some estimates, retirees can expect to spend over $300,000 on healthcare. That’s a lot. An HSA can help cover future costs tax-free. Also consider long-term care insurance to protect your nest egg from unexpected medical needs.
Emergencies don’t retire when you do. Without a solid emergency fund, one surprise expense could mean serious debt.
Tapping your 401(k) early can trigger taxes, penalties and lost growth. If you’re laid off while still repaying a loan, the consequences could be costly.
Default contributions (often as low as 2%) aren’t enough. Max out your contributions, especially if your employer offers a match — it’s essentially free money.
Don’t bank on luck or a windfall. Start saving early and consistently, even if that means cutting back on large expenses like college tuition for your kids. They can get student loans — you don’t have retirement loans.
Even if you believe in your company (or another company like Apple), diversify. If the business struggles, your job and retirement savings could both take a hit.
Without proper life insurance, your family could face financial stress if something happens to you. It’s a crucial part of your retirement plan.
An injury or illness can stop your income cold. Disability insurance replaces a portion of your salary so you don’t have to drain your retirement to survive.
Don’t chase trends or make emotional investment choices. A “hot” fund today could be tomorrow’s regret. Base decisions on strategy, not hope.