Retirement is something that I am looking forward to.. Hell I?ve been thinking about retiring since I was 9 years old. No lie. In mind I have it all figured out. What?s better than having all the time in the world to do what you want, travel where you want, and basically lounge around if you want? Imagine you wake up.. brush your teeth and go commando under your favorite color snuggie.. all day!
Dreaming about retirement can be really exciting at first, that is until you realize? that 1, retirement is forever away and 2 you still don?t have enough money in your account to last you through the years. Suddenly, the Caribbean cruises and going commando under a snuggie turns into nightmares of food stamps and nursing homes?
Before this becomes my reality I figured it was best to watch out for retirement blunders. So, I got to thinking? I said self and my self said ?hmm? What do we need to look out for.. Then I wrote a list?
Mistake #1: Investing too Late ? What most people don?t understand is the value of investing early. I didn?t figure this one out until I turned 24 and I started to learn about time value of money and compound interest. Time is the biggest ally that anyone can have when it comes to growing money. The concept of compounded interest shows exponential growth for every year your money is invested. Isn?t that awesome! I came across this chart that showed a young guy investing from 20 to 30 comparing that course of action to investing from 30-50 and the young guy won out!? With that said.. invest while you?re young. What we do is max out our 401k?s and invest in real estate.
Mistake #2: Taking a Loan on Your Retirement Account ? Let?s be real here? A retirement account is not a savings account. Retirement is for retirement only. I will never ever ever ever ever take money out of my retirement accounts. But what if it?s an emergency Dom? That?s what emergency fund are for my dear! Also, we live on 50% of our income so if shit hit the fan we can just adjust savings down :-) Therefore, you should never borrow from your own retirement savings. This greatly impairs the earning ability of your money.
I don?t care if you can pay the interest or you have an hot investment idea that needs seed money. Raiding your retirement accounts is a no no.. .
Mistake #3: Putting All Eggs in One Basket ? I wrote and article about asset allocation. Truth be told I know for a fact that 90% of my gains is going to come from proper asset allocation. I used to attended investing seminars, and listen to financial gurus all the time, and the one thing that they always advise is to diversify. I?ve learned that putting your eggs in one basket could work two ways.? You can make a killing or you can lose your shirt. A lot of times people make a killing, but soon realize that the economic cycle has changed and umm? now they are on the losing in. For example.. the fed drop interests rates right certain securities started to give some impressive returns. When the interest rates go up those same securities will start giving those gains back. If you don?t allocate your portfolio properly or timely.. boom.. you?re on the losing end. I stick to a basket of index funds with an 80/20 ratio. That?s 80 stocks (S&P 500) and 20% bonds.
Mistake #4: Cashing Out ? ::Sings:: I got a condo on my wrist girl, I?m cashing out. I live in the D.C. area and I learned that there is a slim chance that I will stay with my current employer for the rest of my natural life. However, when I do decide to leave my current employer or get fired b/c I?m too awesome (that?s the only reason I?ll get fired). I won?t be cashing out my 401k.. Hell.. I don?t really have to worry about this one. I don?t invest in my company 401k. (Gasp) Well.. my employer doesn?t match 401k and the options suck. He opted to go for rock star healthcare plan and paying us a lot of money.. I love him for that decision. However, if I did have a 401k or if my wife left her company we will not cash the 401k out. Why.. well uncle same loves early withdraws and he will tax our asses like nobodies business.. I?m not with giving uncle same 10% of my money as a fee then paying my marginal tax rate (33%) on the income also. Getting taxed to take money out of your 401k early is ? overrated! I would roll it to a IRA or to my new companies 401k instead.
Mistake #5: Counting on Social Security ? I pretty much counted social security out. Politicians always talk about taking it away with every freakin? election. So, I?m going to call this icing if we end up getting social security. It?s better to just save on our own, since social security doesn?t give much security anyway. I?m a fan of saving for my own retirement and not relying on the government to fund it for me.
Mistake #6: Not Having A Retirement Number ? I love that investment companies commercials.. ?What?s your number? and the guy is just randomly shouting out numbers. It made me realize I needed to know my number. Our number happens to be 1.6 million. This will allow us to live on 6k per month adjusted for inflation (3%). As long as we average 8% per year we are good for 30 years. Just blindly saving isn?t the best way for a bright retirement future. If you don?t establish a budget, you might end up outliving your retirement savings and having to call upon your children or other relatives to support you. I don?t plan on calling on my little girl to help me out in retirement.. that?s a parent FAIL!
Mistake #7: Living too Long ? This might sound harsh but the real reality of this is when you underestimate your how long you may live. Right now we planned to live until 90.. I figure if we make it to 90 and run out of money.. F it . I?m old I?ll live the rest of my life on government handouts.. Yes this is a contradiction, but I?ve successfully planned until 90.. give me a break!? Having more is certainly better than having less. So, I might have to rethink our plans of living until 90 and add 10 more years to it. I?ll have to re-run my numbers.
I say all of that to say this? retirement planning is very very important. You can?t finance retirement, so take responsibility for it now. Also, there is a such thing as saving for retirement too late. Planning for your future can mean the difference between being happy and being miserable.. so do like I did and avoid these 7 retirement mistakes!
Do me a favor! leave a comment below telling me how you plan to avoid these 7 retirement mistakes. Be as specific as possible.
Source: http://www.yourfinancessimplified.com/7-retirement-planning-blunders-you-need-to-avoid/
correspondents dinner i am legend san antonio spurs greta van susteren tony parker the five year engagement chris kreider
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.