5 Ways You’re Sabotaging your Retirement Finances
For the past 30-50 years we’ve been saving for retirement. We’ve read the countless articles telling us how we’re not putting enough into our retirement savings, how our retirement portfolio isn’t diversified enough, and how we’ll never have enough money to participate in retirement travel.
With all the news of the recession and decreased senior social security it’s easy to get bogged down in the logistics of retirement savings. However, while navigating the pit-falls of retirement, you might in fact be unknowingly sabotaging your own retirement plan.
Take a look at these 5 areas of a retirement plan that U.S. News & World Report put together and make sure you’re not sabotaging your own retirement!
Not negotiating better pay upon hiring. In this economy, it’s easy to be grateful for even having a job. But you are definitely short changing yourself if you don’t negotiate for higher pay once an employer presents a job offer. A higher starting salary sets you up for bigger paychecks down the line because most raises are calculated as a percentage of your current pay. The worst an employer can say is no.
Working less than 35 years. Working less than the typical 35 years before retirement could be seriously eating into your senior social security checks. Your retirement checks are based on the 35 highest years’ salary you’ve received since you’ve been working. If you’ve worked less than 35 years, then however many years you didn’t work are averaged in as $0 when your retirement checks are being calculated.
Allowing lifestyle inflation to take over. As your paychecks grow, most likely so does your spending. When you make more money it’s easier to enjoy the finer things in life. We’re not saying you need to hoard your money, but when you make more, put more into the bank for retirement savings. Still buy that condo on the beach, but not at the expense of your retirement lifestyle.
Withdrawing money from retirement investments when they’re doing well. If you have stocks for retirement that did well last year, good for you! This does not mean you need to increase the percentage you take out. Keep that money in your retirement investments!
Mindset of “there’s always tomorrow…”. If you consistently put off saving until future years you will not have enough saved to retire well. For most people, retiring comfortably takes years of diligent savings. The earlier you start saving, the more time your money has to accumulate interest and growth.
