Four Retirement Pitfalls to Avoid at All Costs
If you're beginning to question whether you'll ever save enough for retirement, you're not alone.
According to the 2024 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), only 21% of respondents felt "very confident" about having sufficient funds for a comfortable retirement. In the same survey from 2023, 64% of people said that preparing for retirement causes stress.
These statistics highlight common missteps that can derail retirement plans and sometimes lead to irreversible financial consequences. I refer to these as "retirement pitfalls." Here are a few key ones to watch out for:
Lack of a Written Income Plan
One of the biggest concerns for soon-to-be retirees is outliving their money. However, many are navigating retirement without a clear strategy, without knowing how much they'll need each year, where to draw income from, or how long their savings will last.
Taking Excessive Investment Risks
Some individuals focus so much on growing their wealth that they neglect to safeguard it as they near retirement. Others may believe their portfolio is moderately or conservatively managed when it's more aggressive than they realize.
Being Too Frugal to Enjoy Retirement
Some retirees become so fixated on preserving their retirement balance that they limit their spending unnecessarily. They skip trips they once dreamed of or reduce family visits, only to look back decades later with regret over missed opportunities.
Giving Away Too Much Money Too Early
This pitfall often involves retirees supporting adult children who still rely on them for daily expenses or covering significant financial obligations like student loans. Some parents loan money interest-free or co-sign on loans, risking their own financial stability. Others give away large sums too early, leaving themselves short in later retirement. This generosity can backfire, harming both the parents and the children in the long run.
To avoid these pitfalls, ensure you have a solid plan in place. The sooner you correct course, the better you'll feel about your financial future and your ability to enjoy a secure and fulfilling retirement.
