When it comes to retirement planning, never before have so many things been so much in flux: the job market, the stock market, and the entire world economy. It is anybody’s guess at how Social Security and Medicare might change.
According to Consumer Reports Money Adviser, this is one of those situations in life where there are things we can control and others we can’t.
Here are seven common mistakes most of us can avoid:
Not having a plan. At a minimum, have a best-guess estimate of (a) how much money we’ll need to retire, and (b) how much we’ll have to save and invest each year to get there. Also, (c) how we plan to use our time and energy in retirement.
Not having alternate plans. One plan is no longer enough. Have at least a plan B and possibly a C, D and E.
Not knowing what you’ve got. Besides retirement accounts, many of us have picked up an assortment of other assets. The result of sorting it out could be a pleasant surprise.
Underfunding accounts. This year, the limits on 401 (k) contributions have risen to $22,500 for anybody over 50 and $17,000 for everybody else. Consumer Reports Money Adviser notes that it’s worth contributing as much as you can.
Wimping out on risk. With inflation recently running at 3.9 percent and five-year CDs yielding an average of 1.2 percent before taxes, cautious retirees can lose ground, fast.
Ignoring fees. We seem to have resigned ourselves to retirement plan fees, which can be just as dastardly and far less transparent as debit card fees and other charges. You need to be aware of fees on investments outside of retirement accounts.
Depending on home equity. It’s best not to count home equity in your net worth unless you plan to sell your house. Consumer Reports Money Advisor suggests looking at home equity as a form of insurance in case your other retirement projections don’t work out as planned.
For more information, visit www.consumerreports.com.