When it comes to their retirement funds, most Americans feel confident. When it comes time to retire, 23% of Americans feel extremely sure, and 37% are moderately confident that they will be able to do so financially. But even automatic donations made throughout your working years might leave you suffering in your retirement years.
Saving for the Future at the Expense of Present Needs
According to Erik C. Olson, a certified financial adviser with Arete Wealth Management, it’s a lot simpler to concentrate on the here and now than to think about the future. After all, when bills pile up, setting aside money for your golden years may not seem as urgent. It’s possible to save more money for retirement if you look closely at your expenditures and identify areas where you can cut costs.
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Underestimation of Your Retirement Funding Needs
You may only watch your spending because you want to put money aside for your golden years. If you haven’t taken the time to estimate how much you’ll need to retire comfortably, your efforts may be for naught.
To prevent being caught off guard, work with a knowledgeable financial planner to better understand the situation and put a strategy in place.
To obtain a broad estimate of how much you need to save, utilize an online calculator such as Vanguard’s retirement income calculator or Fidelity’s MyPlan Snapshot.
Not Knowing What Diversification Really Is
You’ve heard that diversification is a good idea for your investment portfolio. According to Olson, you might assume it’s smart to split your 401(k) investing dollars across the 10 top funds. Because they invested in the same kinds of equities and bonds that did well lately, these funds may have an excellent track record.
Only Save When the Market Is Profitable
As a result, you’ll pay a premium to invest in a retirement account when the stock market is rising.
We recommend setting aside a predetermined amount of money from each paycheck for your retirement instead of trying to time the market. As soon as you can afford it, increase that amount.
Creating an Autopilot for Your Contributions
It is possible that you will not have enough money saved for a decent retirement if your retirement plan does not automatically increase your contribution rate each year or if you fail to do so manually. Most financial gurus advocate saving at least 10% to 15% of your salary each year.
If you cannot make that much of a contribution, ensure you have enough in your 401(k) to take advantage of any matching funds your company may offer. Then, if your salary grows, you may put more money away each year.
Not Considering the Possibility of Emergencies
You may jeopardize your retirement savings if you put everything into one account but don’t have an emergency fund. If you lose your job, cannot work due to sickness, or have any other unforeseen expenditure, you may have to dip into your retirement account to keep yourself financially afloat.
Taking Money Out of Your Retirement Account
Your retirement savings might be in jeopardy, and your tax bill could skyrocket if you’ve used your retirement funds to pay off debts, buy cars, or make down payments on homes.
Quick Retirement Withdrawals
It’s possible that your savings won’t last through your retirement if you’re taking too much money out of them each month. You may overestimate how generous the market and inflation will be to you in retirement if you take out more than 3% of your savings each year.
You may have to lower your living standards if you want your money to survive. Alternatively, you may need a higher income to save more money for your retirement and avoid having to dip into your savings.
Overspending on a House and a Car
If you own a vehicle or a house, you’re probably used to making monthly payments. However, are you in the habit of overpaying for a house or automobile you can no longer afford? If this is the case, you may not be able to save much for retirement.
Your long-term retirement savings will benefit more if you cut your housing and vehicle expenditures by 25% than if you never buy another cup of coffee or eat out again in your life.
If you’ve paid off your house by the time you retire, you may make the case that you won’t have to worry about that expenditure. However, if you don’t have enough retirement funds, you won’t be able to afford the upkeep, insurance, and utilities.
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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.
Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.
Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.
Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.
Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.
With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.
Aaron can help you and your family to create, preserve and protect your legacy.
That’s making a difference.
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.