Although most people are aware of how important it is to plan for retirement, it is easy to fall into retirement planning pitfalls that have significant consequences down the line.
One of the most common pitfalls is money itself. Many people simply do not save enough early
enough. It is recommended that people save enough to have 40 to 60 percent of their pre-retirement income after retiring, depending on their planned lifestyle. The later a person starts saving, the more they need to save each year. In 2015, individuals will be able to contribute up to $18,000 per year to their 401(k)s.
The money saved for retirement should be earmarked only for retirement. A 401(k) is not an
emergency savings account; it is a retirement account, and withdrawals before the age of 59 1/2 are subject to penalties and income tax. To avoid the temptation to take early withdrawals, one may wish to keep emergency savings in a money market account.
Avoidable financial fees can have a substantial impact on a person’s retirement planning efforts. According to FeeX.com, the average American spends about $155,000 in unnecessary fees over the course of a lifetime. Fees that are easily avoidable include ATM fees, credit card fees, overdraft fees, late payment charges and termination fees.
Finally, missing out on a healthy lifestyle can lead to a less robust retirement. Being in good physical shape allows one to enjoy those golden years to which all that retirement planning has been leading. In addition, the financial cost of health care for preventable diseases can be substantial. Eating a diet rich in unprocessed foods, exercising several times a week, and visiting the doctor for routine check-ups can all help secure a happy, healthy retirement.
The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit http://www.hooklawcenter.com/ or call 757-399-7506.