Long gone are the days of working until 65, blowing out the candles on your retirement cake, and hitting the road for Florida with a plentiful pension and generous health benefits. Today’s soon-to-be retirees and retirees face challenges that few are prepared to financially weather. More and more Americans are working longer and harder to pay for the price of peace of mind. Help secure your future by watching out for these common mistakes that could leave your retirement dreams little more than just that—dreams.
Mistake #1: Not saving early enough.
Don’t wait for your first gray hair to start thinking about how you’ll fund your golden years. When it comes to saving for retirement, “You can’t make up for lost time—no matter what your budget is,” says LearnVest, an American financial planning company.
Sadly, many pre-retirees may have already waited too long: about 75 percent of Americans over 40 are behind on saving for retirement. Overall, 56 percent of Americans have less than $10,000 saved for retirement, and 33 percent have no retirement savings at all, reports Times.
If you start saving and planning in your 20s, you have 40 plus years for those gains to compound and your assets to ride the ups and downs of the market.
Look at the math: assuming you work from age 25 to 65 (40 years) and live to age 95, you’ll need to fund 30 years in retirement. For every year worked, you’ll need to fund one year of living expenses plus save enough to cover another three-fourths of a year of expenses in retirement, writes CNBC. Why three-fourths? The typical advice is that you should aim to replace at least 70 percent of your annual pre-retirement income through savings, notes NerdWallet. The exact number will depend on your lifestyle, but the longer you wait, the harder it will be to catch up.
How to avoid it: Start saving and start researching the retirement savings account that’s right for you. You can’t protect and grow your hard-earning retirement savings if there’s nothing there to begin with.
Mistake #2: Relying only on familiar or traditional assets.
One of the biggest problems Americans face when planning for retirement is ignorance, reports Business Insider, with 40 percent of pre-retirees simply unsure of what to do to prepare for retirement. This lack of financial literacy leaves many at a disadvantage when it comes to building their retirement portfolios, as they may end up putting “too many eggs in the same basket” or relying only on conventional assets they’re familiar with, like stocks, bonds, and mutual funds.
These conventional assets, however, are often subject to the whims of the economy. Fortunately, the same factors that weaken traditional retirement holdings can do the opposite to physical assets like gold and silver, as safe haven demand for precious metals tends to increase during economic slumps. Being overexposed to assets that share the same risk factors, like stocks and mutual funds, could leave your retirement account in the red when financial turmoil unexpectedly strikes.
How to avoid it: Diversify your retirement portfolio to avoid being overexposed to paper assets that typically move up or down at the same time or rate. Diversification is a simple risk-reduction strategy that almost everyone can employ, regardless of the size or age of their portfolio. Get started by familiarizing yourself with alternative assets like gold, silver, and real estate, and how to hold them within a Self-Directed IRA. This type of retirement account puts you in complete control of your asset mix. At least half a million retirement accounts already hold alternative assets, including precious metals, reports the Government Accountability Office. Your retirement account can, too.
With gold on your side, you can build a retirement that’s stronger and safer. Find out how U.S. Money Reserve’s Gold Standard IRA program combines the traditional protection of gold and silver with the modern convenience of a Self-Directed IRA. Sign up to receive a FREE Gold IRA eBook to learn how you can start protecting your future today.
Mistake #3: Putting your faith in government programs.
Medicare and Social Security can help offset the costs of retirement, but these programs were never meant to sustain you through retirement, nor could they at this point.
For one, qualifying for Medicare does not mean all your healthcare costs will be covered. Medicare expenditures “will assuredly increase as this generation retires, forcing many individuals…to pony up for supplemental private insurance to fill in the gaps the government doesn’t fill,” says Financial Planning.
And if you think you’ll be able to use part of your Social Security check to help cover medical expenses, think twice. As of January 2017, reports Fox Business, the average retiree receives $1,360 per month from Social Security. That’s an average annual payment of just $16,320.
Is that enough to live the comfortable retirement you’ve always dreamed of, let alone cover the costs of healthcare expenses that Medicare doesn’t cover like dental care and hearing aids? Probably not.
How to avoid it: Social Security and Medicare were designed to be part of a package that also included retirement savings—savings you put away and protect. It’s up to you, not the government, to make your retirement great. Whatever you get from the government is icing on the cake.
Mistake #4: Failing to account for the unexpected.
It’s easy to make a list of things you know you’ll need or want in retirement, like a new pair of glasses each year or regular trips to visit the grandkids. It’s much harder to plan for the things you don’t “want” or can’t anticipate, like a devastating medical diagnosis, a car accident, the cost of a new roof, or cuts to your Social Security or Medicare benefits.
Paying for surprise expenses may not seem like a big deal while you’re working, but failing to account for unexpected expenses can be disastrous as a retiree on a fixed income.
How to avoid it: Planning and flexibility can keep your retirement secure. Look back at how much you spent on unexpected expenses in the past year or two and add on the average anticipated expenses awaiting you in retirement. Uncertainty may be life’s only certainty, but you can take steps to research and plan to the best of your ability.
Mistake #5: Being absent from your retirement plan.
When you’re in charge of your retirement, there’s absolutely no limit to how well you can set yourself up financially. Allowing someone else, whether mutual fund manager, financial consultant, or spouse, to make financial decisions about your retirement without you is a recipe for disappointment.
“Only 10 percent of the country’s workers have established some sort of formal retirement plan,” finds U.S. News & World Report. You don’t have to be part of this 10 percent.
How to avoid it: Take charge of your retirement and choose to stay in-the-know. Be strategic about how much you save, how often you save, and how you use these savings to further secure your retirement. If you’re not sure where to start, call 1-844-307-1589 to discuss your current retirement status and explore your individual retirement needs.
Don’t let your retirement dreams turn into a nightmare. With the help of U.S. Money Reserve’s Gold Standard IRA program, you can make sure your golden years truly are just that—gold. Click here to discover how precious metals can help protect your future and bring your retirement dreams to life.