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I only started taking my own retirement saving plans seriously after my thirtieth birthday, when I stopped procrastinating and started looking ahead to my financial future.
I spent a lot of quality time strategizing how to make up for what I felt was lost time investing in retirement plans that would allow me to have a strong portfolio years down the road. But I also found myself making some initial mistakes over what kind of retirement fund to set up for myself and how much to contribute.
As I committed more and more to saving every month, I wanted to make sure I was avoiding any additional mistakes that would set me back even more. That's why I turned to five financial planners, who shared the biggest retirement saving mistakes their clients make and how we can all do better.
Last year, when I saw the money inside my SEP IRA take a big hit because of the market, I grew worried that I made a mistake and even considered withdrawing my money out of that retirement fund.
Phil Lubinski, CFP and Co-Founder & Retirement Income Specialist at IncomeConductor, says he often sees pre-retirees bail out of their retirement fund when the market becomes volatile.
"Even if they manage to get out at the right time, rarely have I seen anyone who knew when to get back in. In order for this to work, both sides of that strategy have to be timed perfectly," says Lubinski.
A better solution, according to Lubinski, is to create a financial plan based on their individual retirement needs and stick to it.
"When investors get within five years of retirement, I recommend removing the first five years of their retirement income from the market completely. This protects the money they need in the beginning of retirement, even if the economy crashes, while giving the rest of their money at least 10 years to grow and ride the markets before it's needed for income," says Lubinski.
One big ongoing mistake that I constantly make is making irregular contributions to my retirement fund, which is something Kelly Crane, CFP and President and Chief Investment Officer of Napa Valley Wealth Management, says is quite common.
He says that even people with an employer-sponsored retirement savings option like a 401(k) don't always take advantage, but that business owners in particular tend not to save enough. This might be because they're preoccupied with the other aspects of entrepreneurship, or because they want to put every dollar into growing their business.
Making retirement savings a priority is something Crane recommends.
"These are the most important things a person can do to prepare for retirement," he says. "Just as a business plan is critical before opening a business, a retirement plan is necessary before stepping into retirement. For those who underfund their retirement because it's not an urgent priority at the time, they are creating a potential future financial crisis."
When I started exploring my own retirement strategy, I began asking friends and family. What I quickly learned was that everyone had a different strategy and some people didn't have any kind of plan at all.
Patricia Stallworth, CFP and the author of the upcoming book "Rock Financial Independence: 7 Steps to Build a Pathway At Any Age," says quite often people don't have any kind of long-term retirement plan.
"Retirement is complicated and it's difficult, if not impossible, to reverse bad decisions," Stallworth says. "Not having a plan can lead to a host of errors, from not saving enough to maintain your lifestyle, to underfunding health care, to forgetting the impact of debt in retirement."
She suggests working with a professional to get a customized plan for your situation. First, look to your employer for any resources that might be available, and second, consider working with a financial advisor, she says. "Your retirement is just too important to leave to chance."
For a lot of people, understanding what to invest in and how to set up their retirement fund can be a headache. Jonathan Gassman, a CPA and CFP, says people come to him with bad investments or get rich schemes.
"I see this time and time again, where people think they could get rich fast because of who they know," he says. However, those people tend not to understand what they're buying or what's at stake until it's too late, he's found. "Expectations are high yet due diligence is poor," Gassman says.
"This all could have been avoided by understanding there are no get rich quick deals (without major risk), having an attorney or financial advisor review the deal, and sticking to a plan," he continues.
Figuring out where to pull cash from monthly to contribute to my retirement fund can be a bit tricky, especially if it's something I don't prioritize. But Tania Brown, CFP and financial coach for SaverLife, advises redefining retirement to fit your situation, whether that's planning on getting a part-time job they love or deciding they'll relocate for a lower cost of living.
Brown remembers speaking to a woman years ago who was behind on her savings and living in Brooklyn, New York. "When she mentioned she would love to take lots of cruises and was open to relocating, I suggested exploring a relocation to Florida, especially since she worked remotely," Brown says. "Immediately, she saw more of her income, because she no longer paid state taxes. Her income remained the same but her living expenses dropped by 50%. She was able to dramatically increase her savings and retire at her desired date."
Jen Glantz is an entrepreneur and author who writes about perfecting her finances for her business and her life.