It may seem like a surprise, but it's time for the baby boomers to start planning for their retirement. As a matter of fact, for most baby boomers, if you're just getting started now you may already be behind the 8-ball. If you already have a savings plan in place you may also be surprised to discover that even that may not be enough to support you through your retirement years. People are living longer, which means that you'll need to plan to save a lot more money than your grandparents did for retirement. This and many other misconceptions about retirement is laying a faulty groundwork for the next generation's future. There are 5 mistakes to avoid in retirement planning.
1.) For those who have not yet started planning, they may feel that it will be an impossible task to save enough money to live off for the rest of their life. While it may be a challenge to do, we live in a world where investments can be compounded, IRA deposits can be tax-deferred, and 401ks and annuities abound. If you're not sure how to go about getting started, take advantage of a financial advisor to help you plan.
2.) Another mistake that is often made is underestimating how much money you will need. Unless you plan to spend your retirement years in a hut somewhere in a third world country, you need to plan to live in the U.S. for as much as 20 years. That takes money. Most people expect to live for around 10 years after retirement, and some even less, but statistics show that with so many successful medical investments the average person should expect to live at least 20 years after they have retired.
3.) Another one of the 5 mistakes to avoid in retirement planning is miscalculating how much money you need. While it may be difficult to determine an exact figure for your future, sitting down and creating a budget may reveal to you how effective your present saving plan will be when you are at a point where you need to rely on it.
4.) Still another mistake is failing to plan for inflation. Remember, the savings you have today will be worth a lot less when you retire. You have to plan your retirement dollars for what your money will be worth in the future – not on today's values.
5.) No one likes to think about retirement. The only thing after retirement is your exit from this world. Realistically though, planning for retirement should come before all the other financial goals you may have. It may seem that saving for a new home, your children's college education, or that trip around the world may seem important at the moment, and while they are to some extent, they should not be put ahead of your own retirement and financial security.
Learning how to plan for your future is never an easy thing to do. You need to be part prophet, part financier, and part genius to make it all happen. Above all else, you want to avoid the 5 mistakes to avoid in retirement planning. You may commit some mistakes along the way, but being flexible enough to make adjustments to your plan will help to ensure that your retirement years will be comfortable and well prepared for.