Retirement planning has become more complicated over the years. In addition, more of the planning and funding responsibility falls on the individual. In the past, companies provided pensions (defined benefit plans) that offered a guaranteed income for the retired employee. It was a solid financial foundation that was based on the years that you worked for a company and the average salary that you obtained.
Now it has become more important for each person to understand and manage their retirement planning decisions. There are many more types for retirement plans available depending on your work status or income level, such as; 401k plans, Roth IRAs, 403b plans, 457 plans, etc. It can look like a regular "alphabet soup" of decisions.
So here are a few suggestions and some mistakes to avoid along the way toward building your retirement picture.
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being too conservative
Retirement planning is a long term goal, investors need to consider the amount of risk they can tolerate in order to get a higher return on their investment. Many times retirement money is placed in conservative accounts such as money markets or CDs
Getting your ducks in a row. Get started with retirement planning early in life. It is the best advantage for any young worker and be disciplined about making contributions to your retirement plan every month.
forgetting to monitor
Be watchful of your retirement plan. Don't forget to rollover old 401k plans from prior employers. And take advantage of any current retirement plans as you change careers, especially if the current employer plan offers matching contributions.
not investing wisely
Retirement plans can be confusing with so many investment choices and regulations to consider. Don't let that be a roadblock. Seek out a financial adviser or review the retirement plan information with a benefits representative from your company.