5 Retirement Planning Mistakes to Avoid in Your 30’s

Written by , November 26, 2012

5 Retirement Planning Mistakes to Avoid in Your 30sRetirement planning isn’t something you only need to think about once or twice a decade, or even just once or twice a year. Retirement planning is an ongoing process, and one in which you need to play an active role. Planning and saving for your retirement begins as soon as you get your first job.

Throughout your working years, you’ll face a number of different opportunities to shape the future course of your retirement. Make good decisions and you’ll be in a good position to retire, but make bad decisions or mistakes and you’ll find yourself in serious difficulties.

Here are five retirement planning mistakes to avoid when you’re still in your 30’s.

  • Not Beginning to Save. The biggest mistake anyone can make in their retirement planning is not starting the saving process. The longer you have to accumulate money, and to have that money earning a return for you, the more likely it will be that you’ll have enough to fund your future retirement.
  • Not Saving Enough. Of course, opening a retirement account and then not making a genuine effort to contribute to it is a significant retirement planning mistake as well. Opening your account is an important first step, but it’s only the first step. You need to contribute to that account every year, and try to maximize any tax deductible or tax advantaged contributions to the greatest extent possible. If you don’t believe there’s any room in your budget to maximize those contributions, then you’ll want to take a fresh look at your finances and find a way to rework your budget in order to save more.
  • Not Being Aggressive Enough in Your Investments. Given the rates of return that are currently available for ultra-safe investments like federally insured bank CDs, you’ll be fighting a losing battle if you don’t take some risks with your portfolio. In fact, if too much of your investment portfolio is safe but low yielding investments, then it’s quite possible that the real purchasing power of your savings will decline once inflation is taken into account.
  • Not Taking Advantage of Available 401(k) Matches. While the number of employers who offer 401(k) matches is declining, it’s still an incredible opportunity to boost your account value. Think about it; if you were provided the opportunity to invest in something that would generate an immediate and guaranteed return of 50% or even 100%, you’d almost certainly jump at the opportunity. This is essentially what an employer 401(k) match is, yet too many people in their 30’s just leave that money on the table.
  • Not Taking Care of Yourself. Your largest category of the expense during retirement is likely to be health care. While it’s difficult to minimize those expenses once you’re already retired, you can lower them significantly by taking better care of yourself in your 30s. Eat right, exercise and lead a healthy lifestyle and you’re likely to pay far less for medical care and insurance once you reach retirement age.
  • A successful retirement happens by making good decisions over time. Avoid the biggest mistakes that some savers make in their 30’s and you’ll have a better chance of reaching your goals.

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