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.