How to avoid retirement savings mistakes

May 13, 2011

A recent article discussed the mistakes to avoid with retirement savings.

A recent WalletPop article discussed several mistakes that retired Americans make with their savings and offered advice on the best course of action to make savings last.

The first major mistake the article mentions is ignoring free money that companies offer through their 401(k) plans. Many companies that offer their employees such plans have matching programs, where the company will match an employee's savings up to a certain percentage. With no other stipulations, the matching program offers those enrolled free money. Thus, as WalletPop, enrolling in such programs, if offered, is essential.

Next, those looking forward to retirement need to have a realistic estimate of how much to save. Previously, the golden rule was 75 to 80 percent of pre-retirement income would suffice for retirement. However, now, as prices across many sectors skyrocket, adjusting this estimate accurately is important.

WalletPop highly dissuades anyone from treating their retirement savings or life insurance as a piggybank, as well. The article's rationale is that the borrowed money is rarely paid back, which then directly affects the total savings down the road.

Finally, WalletPop states relying on Social Security too heavily can become problematic. Social Security is meant to be supplemental income for retirement savings, not the only source. Furthermore, those thinking about retirement need to be aware of their Social Security retirement age, as starting too soon could lead to 25 percent less benefits. 

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