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Retirement Account Mistakes

  • By Lauri Paxton
  • 11 Apr, 2017
Like many Americans, you most likely have been squirreling money away for years to prepare for the day that you will be able to retire.  We always tell people that you are never too young to start to save for retirement.
As you get ready to retire make sure that you don’t make a mistake that can cost you penalties.  Actively managing your retirement assets is essential to your retirement planning.   Being proactive in asset allocation will allow you to have the best possible nest egg to sustain you upon retirement.
Perhaps you’ve been given the golden parachute and an early out of a senior level position.  Now may be the time to take a step back and plan your next chapter.  It could be travel, spend time with family or perhaps you may decide to become a consultant or open your own business.
Many employer-provided retirement accounts, such as 401(K)s, often allow you to borrow money from the account.  Where you can get into trouble is if you leave the company.  If you have borrowed money and leave you must repay it immediately.  If you do not repay the money immediately it will be considered a withdrawal of funds, leaving you with a hefty tax bill and an early withdrawal penalty.
As you invest and age it is always a smart idea to review your investment mix with a trusted financial advisor.  Aggressive growth Investments that you made as you were younger were a good choice at the time, but may not be your best performers now.  Be sure to review your investments and don’t be afraid to replace poorly preforming funds as needed.  Based on your age, financial advisors can help you to determine which investments and levels of risk are right for you.
If you’re employed and your employer offers a contribution toward your retirement, be sure to maximize your employer’s contributions.  Most employer-provided retirement accounts include an employer contribution amount.  Often employers will match from 50-100% of your contributions up to a certain percentage.  This is free money that your employer is offering to give to you, so take advantage of this benefit.
When employees are young in their careers, it’s great to receive that nice paycheck.  We all enjoy living in the moment, going on trips, and buying what we want without a thought of retirement.  Failure to plan when you begin your career can lead to longer working years and a less than desirable quality of life after retirement.
Even if you save 1%, start saving something for retirement.  One of the worst mistakes that you can make as you grow in your career is to not participate in employer offered retirement plans.  These retirement plans help you to build the financial stability that you will need once you decide to retire.  Remember that you are never too young or too old to start saving for a retirement.  If you are unsure about how to proceed with saving for your retirement, schedule an appointment with a trusted financial advisor.
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