1. Not preparing a budget
Do not wait until retirement to make a detailed budget. Budgets built on “frugal” spending
or optimistic estimations can be broken by relatively small lifestyle changes. Create your
retirement budget years in advance and tweak it annually to improve its accuracy.
2. Not Taking advantage of catch-up contributions.
Those who are 50 or older are allowed to make catch-up contributions up to $6,000 for 401(k)s or $1,000 for IRAs in 2018. These contributions are added to the 2018 defined contribution limits of $18,500 for 401(k)s and $5,500 for IRAs, for contribution totals of $24,500 for 401(k)s and $6,500 for IRAs.
Those who take social security benefits before their full retirement (benefits are available
as early as age 62) will receive reduced payments. If you are still working, tax repercussions
may make delaying benefits a smart option.
4. Decreasing retirement savings
As retirement gets closer, those with accounts projected to meet retirement needs often cut their savings, thinking that their money won’t grow much before retirement. You should remember that this money will actually keep growing until the end of retirement, 20 or 30 years down the road.
5. Lending too much to family
For most, supporting family is of the utmost importance. But retirees need to remember
that children and grandchildren have decades more to recover from losses and debt than
they do. It may be hard to say “no,” but if handing out loans scuttles your retirement,
it will end up costing everyone in the family more money.
6. Relying on home values
Many people rely on their home equity to fund a substantial portion of their retirement.
While using home equity is not necessarily a bad thing, diversify your assets as much as
possible to avoid home prices from dictating your entire retirement.