The younger generation of retirement savers is raising concerns about their prospects for a comfortable retirement according to a recent Forbes article, and rightfully so.
After all: Social Security is behind the 8-ball, the pandemic’s economic ripple effects are affecting savers, and lawmakers can’t seem to stop meddling with saver’s futures.
Who wouldn’t be concerned?
Forbes highlighted the results of a poll with 3,000 respondents:
The average American began to stress about their retirement at 25. This varies by state, with South Carolinians and South Dakotans starting by 19 and Arkansans staying calm until their early 40s.
The pandemic also played a role in the stress: “One in three polled have had to push back their retirement timeline since the start of the pandemic, and more than half expect a need to work part-time in retirement to get by.”
Education, preparing an emergency fund, and understanding how a retirement fund works were among the advice given to help alleviate the worry.
Pandemics definitely fall into the category of black-swan disasters you can prepare for decades before retirement. Still, they certainly cause anxiety when they happen.
Black swans aside, financial advisors tell us there are a handful of big (and avoidable) mistakes that impact retirement savers of any age.
Let’s bring the focus to factors we can control, and examine the list.
The five mistakes that can throw any retirement off-track
Recently, Business Insider shared a list of major savings mistakes, created in collaboration with a number of financial advisors and other professionals. We think their advice is worth sharing here.
“Get rich quick” infomercial thinking
You’ve probably come across one of those late-night infomercials that promised you would make tons of money fast. The real world of retirement saving, according to Jonathan Gassman (CFP), is different for people who think they can “get rich quick”:
This all could have been avoided by understanding there are no get rich quick deals (without major risk), having an attorney or financial advisor review the deal, and sticking to a plan.
Of course, Gassman is a voice of experience. Experienced savers are also flexible with their retirement plans based on their situation.
The major take-away here? There are no get-rich-quick deals without major risk.
Skating where the puck was
Tania Brown is a CFP, who related a story to Business Insider about adjusting a Brooklyn native’s retirement plan to fit new circumstances:
When she mentioned she would love to take lots of cruises and was open to relocating, I suggested exploring a relocation to Florida, especially since she worked remotely.
Why would anyone want to stay in Brooklyn who didn’t have to?
We’re joking, but that move resulted in substantial tax and expense savings. Asking the client questions about her situation brought up a new circumstance (remote work) and helped Brown zero in on what her wanted from retirement.
That’s a great story, isn’t it? Getting a huge step closer to your golden-years vision while saving on taxes and cost-of-living at the same time?
The next big mistake is also about mixed up priorities…
Nobody’s going to do it for you
Remember the story of the grasshopper and the ants? It’s just as relevant as the first time your grandmother told it to you.
In other words, “For those who underfund their retirement because it’s not an urgent priority at the time, they are creating a potential future financial crisis” said Kelly Crane, CFP.
This seems like a simple bit of advice to follow, but according to one Northwestern Mutual study, 15% of Americans have nothing saved at all when they retire. According to another study, a staggering 33% were less than three paychecks from disaster.
Saving for your future, even when it’s hard, is crucial. No one else is going to do it for you.
Experts advise that following through with the intention to save is easier with a plan…
Saving by the seat of your pants
Saving for retirement is a long-term venture. Too many daily demands and distractions can easily your attempts to secure your future.
That’s why CFP and author Patricia Stallworth recommends developing a long-term plan instead of “saving by the seat of your pants.” She says:
Retirement is complicated and it’s difficult, if not impossible, to reverse bad decisions. Not having a plan can lead to a host of errors, from not saving enough to maintain your lifestyle, to underfunding health care, to forgetting the impact of debt in retirement.
As Stallworth points out, there is a lot to keep track of when saving for retirement. Having a plan, especially an automated plan, gives you the opportunity to decide once. And stick with it. Rather than rethinking your plan monthly, or even weekly.
That’s especially important when markets get volatile (like they are now). Which leads us to the final mistake that can crack your nest egg…
Succumbing to panic
Market volatility is normal, according to Fidelity. All too often, volatility leads to panic.
For example, the Dow dropped 700 points on Monday, then bounced back the next day. That kind of whipsawing can drive savers to make bad decisions.
Trying to time the market often leads to disaster, according to CFP Phil Lubinski:
Even if they manage to get out at the right time, rarely have I seen anyone who knew when to get back in. In order for this to work, both sides of that strategy have to be timed perfectly.
Lubinski recommends creating an plan and sticking to it, instead of panicking. That can be tough, especially if your risk profile is out of whack.
Having a solid game plan you’re willing to follow, while avoiding unnecessary risks seems to be the best advice of all.
How physical gold and silver can be part of the solution
No matter how old you are, or what stage of saving you’re in, operating without a game plan can put you on the fast track to losing everything.
When it comes to your retirement, “slow and steady” gives you a better chance at avoiding panicky mistakes, and ultimately enjoying a comfortable retirement. That’s why planning, diversifying, and maintaining control of your savings can help keep you on the right track.
Physical precious metals like can be a part of the solution. Their proven track record fits well with a “slow and steady” approach. So, when you’re creating your plan, consider whether adding both gold and silver are a good choice for you.
You’ll stand a good chance of looking back on these decisions and thinking, Glad I took matters into my own hands.
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
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