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8 Top Mistakes in retirement Planning

Most people often worry about facing financial crunch after retirement. By paying attention to some aspects you can avoid the grievous situation. There are top 8 mistakes that if avoided, while planning after retirement life, you can enjoy the quality life that you were living before retirement:

1. Didn’t Plan: Failing to plan is a grievous mistake made by most people. if you are also one of those, then it is high time for you to start planning. Here are some questions that will help you have a better retirement plan:
Decide between hobby and travel, for which you would like to save
How much money will be required so that you could pay for all the expenses?
How much savings do you have at present?
How much saving I need to make?
How much savings do I need to do monthly to reach the target?

2. Start too late: The most common mistake that people make is delayed savings for retirement. It is advisable to start saving as soon as you start working. Getting enrolled to the company’s 401 (k) can help in accumulating wealth. Always keep in mind that as soon as you start saving, the money accumulated over the time period will help you post-retirement life.

3. Do not take advantage of 401k: If your company offers 401 (K) and you are not contributing, this is a serious mistake. The contribution to 401 (k) is made from your paycheck before deducting the taxes. The money contributed in the company’s 401 (k) is not taxable. Most employers have match program that is the employer match your contributions. In short, this is a free money.

4. Ignore the risks: Stocks are riskier affair to invest in, totally ignoring the stocks can hamper the chances of your retirement portfolio’s growth. Go for careful investment by seeking the guidelines of financial planners and advisors. Hewitt Resources professionals can guide you on planning a strong investment portfolio keeping the cash flow and market trends in consideration.

5. Social Security the only Support: It is important for you to wake and realize the truth about relying only on social security for future survival, if you believe that it can save you. Statement of social security are available on line; you can analyze them to get an estimation of the social security amount.

6. Underestimating the cost of health care: Qualifying for the Medicare by achieving an age of 65 years is not enough to cover the total health care cost, you might be surprised to know. According to Hewitt Resources, those people who will retire in 2013 will be need about $220,000 amount for covering the entire health cost. The amount thus calculated doesn’t include nursing and services provided at the home care.

7. Future borrowing: It is possible to borrow from 401K but this doesn’t give you freedom to do so. This doesn’t make sense as you are eating up your retirement fund and it would not be growing as it could have, if was left untouched.

8. Cashout early: Getting tempted to use the 401K cash after having quit the job will require you to pay the taxes and pay for a penalty of 10%. In the case of taking out cash from 401K, before retirement, will require you to pay taxes. Getting the 401k in to the individual retirement account can save you from the burden of tax.