Making mistakes is a good way to learn and grow. And there can be no doubt we will all make a mistake or two in our own lifetime. But we shouldn’t wait to make mistakes ourselves to learn. I’d say that’s especially true when it comes to retirement investing. There are mistakes that others make that we can all learn from and use to improve our overall financial picture.
1. Not saving enough for retirement.
No matter the age or stage of life, Americans are not putting aside enough money for their retirement. While overall saving numbers have improved over the last few years, it is not enough. A list of surveys and studies released in 2012 detailed the numbers of Americans coming up short when saving for their future.
The most shocking numbers came from a LIMRA survey revealing that 49% of Americans say they aren't contributing to any retirement plan type and a State Street survey, which stated 82% of respondents know it is important that they make their savings last a lifetime but just 28% know how to do it. Those numbers are staggering and reinforce the belief of many retirement professionals that many Americans are not taking retirement saving seriously and, as a result, are not saving enough for retirement.
When you are setting your financial goals, try utilizing one of the many free online retirement saving calculators that can help give you an idea of where you stand. You can also contact a professional investment advisor to look at your savings plan and make sure you’re on track.
2. Ignoring fees in your 401k.
This past summer a new Department of Labor ruling came into effect requiring 401k participants to receive information about the fees they pay in their retirement plan. With this new ruling came a flood of stories detailing most 401k investors’ apathy towards the specifics in their 401k, including the fees in their plan. The most popular stat thrown about in these stories was an AARP study that found 71% of respondents were unaware they were paying fees in their 401k.
While the study was actually published in 2011, the fee disclosure requirements put this sobering stat into the spotlight in 2012 and showed just how much work must be done to educate retirement investors. Don’t let yourself be part of the “71%,” take time to learn about the fees in your 401k and don’t be afraid to ask questions to find out more about the specifics of your 401k plan.
3. Using the news to dictate your retirement savings strategy.
In 2012 we had an election cycle, a fiscal cliff and countless other headline making stories. Combine that with a competitive 24-hour news cycle and you get a market that is over saturated with news, reviews and opinions. And this constant barrage of information is not going anywhere anytime soon. Before you let fear and panic cause you to make a rash decision understand that most of these programs are focused on a particular investor type or situation, and usually it’s not the long-term retirement investor.
Staying up-to-date on current events is an important part of being an educated investor. When you start to let the steady stream of stories affect your long-term investing strategy, you may run into problems. Resist the urge to alter your
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