6 On Your Side Answers: Mistakes that could ruin your retirement

Local News

KNOXVILLE, Tenn. (WATE) – If you’re like a lot of workers, you may have doubts about retirement because it seems so far away. WATE 6 On Your Side reporter Don Dare explains some mistakes that guarantee ruining your golden years:

Living Beyond your Means 

  • Keeping Up with the Joneses: “Keeping up with the Joneses” is a phrase our grandparents coined. You can’t spend your whole life pretending to be rich and then think you’ll retire rich, too.
  • Spend Wisely: While living within your means isn’t always glamorous, it is smart. And being smart is what will make you a wealthy retiree.
  • Keep Within Budget: Rather than upgrading your smartphone every two years and your car every three, try being content with what you have.
  • Establish a Realistic Budget: Having a realistic budget is the first step toward living within your means

Not Saving Enough Money 

  • Must Start Saving: When you’re not spending money to constantly upgrade your toys, you’ll have more money to save.
  • Saving is Up to You: With traditional pensions all but extinct, it’s up to you — and you alone — to save up the cash needed to live comfortably in retirement. 
  • 10-15% of Income  = Retirement Fund: Failure to save enough money is a sure way to retire poor. Ideally, 10 to 15 percent of your income should be going into a retirement account each month.
  • Don’t Count on Social Security: The average monthly Social Security retirement payment was  just $1,400 dollars in the most recent survey. 

Saving Money in the Wrong Accounts

  • Avoid Typical Bank Savings: If you are saving for retirement, financial experts say a common mistake is putting  money in the wrong accounts. A typical savings account isn’t going to cut it.
  • Look for Tax-Shelter Account: Instead, put that money in tax-sheltered retirement accounts such as 401(k) or individual retirement accounts. These accounts come with tax benefits as well as stiff penalties for early withdrawals.
  • 401(k) Retirement: By all means, if your employer offers a 401(k) match, put your retirement savings there first. Don’t pass up that free money. 

Don’t Finance Everything

  • Payment Plans Add Up: Today, retailers make it easy to buy everything — from furniture to a car — on a payment plan. However, you’ll never have money to save for retirement if you finance every purchase.
  • Interest Kills Payments: Rather than spend money on interest, flex your self-discipline muscles and wait until you have enough saved up before buying things.
  • Save Up Money to Buy: If you keep yourself out of debt, you’ll be amazed at how far you can stretch paychecks. 

Don’t Let Credit Score Go

  • Keep Credit Score High: If you need to finance something — houses and cars are the usual suspects — you’ll want to have excellent credit to get the best interest rates and terms.
  • Remember, Good Credit = Lower interest; High interest = Bigger payments
  • Otherwise, you’ll end up paying sky-high interest, sending precious money to your creditors that could be used to bolster your retirement account instead. 

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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