The fact that 57% of workers have less than $25,000 saved for retirement is a pretty clear sign that many of us are confused about how to save for retirement. That’s not surprising since 53% are just guessing at how large their nest egg needs to be when they retire.
If you’re trying to sort out the best way to build up your retirement fund, take a look at some common mistakes you need to avoid.
Saving Too Little
According to a Fidelity Investments survey, 40% of Americans save less than 6% of their salaries for retirement. That’s far less than the 15% Dave and most financial experts recommend. Why 15%? It’s enough to accomplish most people’s retirement savings goals while leaving them enough of their income to enjoy life now.
Saving While in Debt or Without an Emergency Fund
One reason people don’t invest enough for retirement is that most of their income goes to payments on debt. It’s important to be debt-free and stay debt free so you can use your income to build a solid nest egg. You’ll also need to have an emergency fund large enough to cover three to six months of expenses. This cushion will help you resist the temptation to borrow from or cash out your savings when large, unexpected expenses pop up.
Saving Too Late
Time is one of your greatest allies when it comes to saving for retirement. The sooner you get started, the more you can save and the more it can grow. Unfortunately, most people don’t realize this until it’s too late. Saving just $100 a month over 30 years can result in savings of $215,000–325,000. But if you wait just 10 years to get started, you reduce your nest egg’s potential by as much as $220,000!
Saving Without a Plan
Long-term goals like investing for retirement require a plan to be successful. You must know how much you’ll need to retire comfortably, what steps you’ll take to reach that goal, and if you have the right tools (investments). Most of us can’t answer those questions on our own, but with the help of an experienced investing advisor, we can. Your plan will probably also need adjustments over time, and your advisor will help you make the necessary corrections without derailing your plan altogether.
Make Sure You’re Saving for Retirement the Right Way
Retirement is one of those things you just want to get right, so if you have questions about how to get started or how you should handle the retirement money you already have, talk with an experienced investing professional so you know you’re on the right track.
Be confident about your retirement. Find an investing pro in your area today.
We can put you in touch with an investing advisor Dave recommends in your area so you can get started today!