Menu burger Close thin Facebook Twitter Google plus Linked in Reddit Email arrow-right-sm arrow-right
Tap on the profile icon to edit
your financial details.

5 Retirement Mistakes You've Already Made in 2018

When you’re counting down to retirement, it’s easy to get caught up in fantasies of your future work-free life. Maybe it’s RV trips to Florida, days on the golf course or quality time spent with family. Whatever your dream retirement looks like, you can be sure you’ll need money to fund it. Unfortunately, if you’re like most Americans, you don’t have nearly enough saved for retirement. But you can help change that with a few key fixes. Read on to find out how with these five easy tips.

1. You’re not taking advantage of higher interest rates.

When’s the last time you checked your savings account interest rates? If you can’t remember when, or even how much money you have stashed away, it’s probably time to do a little self-audit.

According to the Federal Deposit Insurance Corporation (FDIC), national average interest rate for a saving account is just 0.06%. That said, right now you can easily find savings rates as high as 1.20% to 1.30%. Moving your money to an account with higher interest is one of the simplest ways to earn effortless interest. Think about it this way: If you have $5,000 sitting in an account earning 0.06% interest, you’d earn about $3.00 annually. An account with 1.20% interest would earn you $60.00. That’s without any additional deposits and for just one year. After a few years, the returns would really add up.

2. You’re neglecting your health.

You don’t want to reach retirement age just to find yourself in the hospital. Unfortunately, it’s a more common scenario than you’d think. Eighty percent of older adults have at least one chronic disease and 77% have two or more, according to the National Council on Aging. Another sobering statistic: 90% of Americans ages 55 and over are at risk for high blood pressure, a disease that’s preventable through lifestyle choices.

You can improve your health with every choice you make. The food you eat, the exercise habits you start (or rekindle) all can help contribute to a happier and healthier retirement. Remember, healthcare costs are likely to increase as you get older. Why not do the best you can to minimize those costs and improve your health?

3. You’re not getting financial advice from an expert.

Once you’re within 10 years of retirement, you should take retirement planning seriously. Don’t just read a few personal finance books and think you’re good to go (though that’s a start). It’s probably time to turn to an expert. Someone who’s knowledgeable about navigating the transition from workforce to retirement can be invaluable.

That might mean finding a financial advisor to help you map out your golden years. Financial advisors can help you figure out how much you’ll need to retire comfortably, advise you how to invest your assets, give you options on how to fund your children’s education as well as tax plan, estate plan and more. We turn to experts for healthcare, car maintenance, education and all other important aspects of our lives, why not find the person best suited to help us with retirement finances?

4. You’re not using the company retirement plan.

The retirement savings option that’s often overlooked is the one right under your nose: your 401(k). For nonprofit employees, it’s your 403(b) and for government or military personnel, it’s your thrift savings plan (TSP). These work-sponsored options are a great way to lower your taxable income and an ideal way to sock away cash. When your employer matches your contributions, it’s doubly worthwhile for you to take advantage of the account. Even if your company only matches a small percentage, it’s still free money.

Most plans allow you to elect for an automatic deduction from your paycheck. This saves you the effort of transferring money when you remember or find time. Anything you can automate can help make retirement savings effortless. The less you have to think about it the better.

5. You’re borrowing against retirement.

While it might seem like a good idea at the time, borrowing from your retirement fund will set you back, often for longer than you may expect. There are other ways to fund a child’s college education or to cover the cost of a home repair than taking money out of your IRA or 401(k). Maybe it’s taking out a low interest loan or using a no interest credit card or an alternate option. Regardless, your retirement fund should be the absolute last resort.

Once you dip into retirement money it can be a slippery slope to repaying it and getting your investments back on track. You only get the benefits of compounding interest through time. Each time you take money out, you’re setting yourself back. It’s worth exploring other options before you borrow against your future.

Want more advice?

Working with an expert financial advisor is one of the best ways to get your retirement on track and achieve peace of mind. Finding the right advisor for you might seem daunting, but it’s actually easier than ever before. Compare local, fiduciary financial advisors here and make the best choice for you. SmartAdvisor asks you a series of questions and narrows down more than 3,000 financial advisors across the country to find up to three options that fit your needs in your area.

Photo Credit: ©

Nina Semczuk, CEPF® Nina Semczuk is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. She helps makes personal finance accessible. Nina started her path toward financial literacy at fourteen after filling out her first W-4 and earning her first paycheck. Since then, she's navigated the world of mortgages, VA loans, Roth IRAs and the tax consequences of changing states or countries at least once a year. Nina specializes in mortgage, savings and retirement education. Nina is a graduate of Boston University and served as an officer in the military for five years. Find her work on The Muse, Business Insider, Fast Company, Forbes and around the web.
Was this content helpful?
Thanks for your input!

About Our Retirement Expert

Have a question? Ask our Retirement expert.