Planning for retirement is a big deal. If you make mistakes you can run the risk of not having what you need for retirement. There are some mistakes that people make that are more common than others that many people do not realize that they are even mistakes.
The first mistake that many people make is that they do not maximize the amount of money that their company will match. If your company offers a 401(k) and they match up to a certain amount then why would you not contribute as much as they are willing to match? If you do not then it is like throwing away free money. Who wants to throw away free money? No one, so you need to contribute as much as your company is willing to match.
Do not borrow money from your retirement savings account! This cannot be stressed enough. Too many people think that it is fine to borrow money from their retirement savings, but it is a big mistake to do this. When you take the money out it does not have the chance to grow like it would if it was in the savings account. Many people think that it does not matter if they borrow money from this account because they will pay it back and the account will be the same. This is not the case however, the money would be making interest if it was in the retirement savings account, and it does not do that if you take it out and replace it.
Another mistake a lot of people make is that they do not diversify their accounts. Putting all your eggs into one basket can cause a big financial problem for you if something happens to that account, you could lose everything. You need to diversify your portfolio; this will minimize the risk of losing money and maximize your returns.
The next thing that many people do not do which is a mistake is not rebalancing their portfolio. Having a portfolio that is diversified is great, but not so much if you do not rebalance it. Over time you will gain experience and your stock portfolio should grow a good amount and your bond portfolio should grow slightly.
Too many people cash out their employer retirement plan when they leave the company. This is not a good idea. If you cash out your account when you leave the company you run the risk of penalty fees. The money also becomes taxable and therefore you can lose more money. For some people this means that they can lose half their account. Do not cash out too early!
There are many things you should do to get ready for retirement, however there are also many things that you should not do when you are getting ready for retirement. You do not want to lose money; you will need it for retirement. If you want to live comfortably in retirement you will need to be careful about how you go about dealing with your accounts.
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