Whether
you're a working mom or stay-at-home with the kids, saving for
retirement can often be put on the back burner. Between staying on
budget and wanting to build college funds, finding a little extra to
invest in your retirement can be a daunting task. Moms are usually the
driving force in the household when things need to get done. Here are
some tips for moms to avoid these common retirement planning mistakes
when they're considering their financial future.
Biggest mistakes when saving for retirement:
1.Waiting to save.
Start saving early so
your money has time to grow. If you're worried about sticking to your
budget, start small. Even $20 a week can go a long way over time, and
when your budget allows, contribute more.
2. Failing to plan.
It is important to
understand expenses for the type of lifestyle you want, so you can save
enough money. Figure out what your retirement goals are, and start
planning your retirement finances now. There are helpful interactive
calculators that can help you determine how much you will need in
retirement.
3. Saving for college before retirement.
Moms want the best for
their children, but there are many factors when deciding which savings
take priority. Consider this: Your kids have access to loans and
scholarships to help pay for college, but if you don't save enough money
for retirement, you may not be able to afford your expenses.* You could
also have separate savings for college and retirement, and contribute
to both. Even if you're contributing less to each than you would like,
the longer the money is in the account, the more the interest will
accumulate.
4. Retiring with a lot of debt.
Find a way to pay down
or pay off consumer, student loan, and mortgage debt before you retire.
These recurring payments will be harder to make when you're on a fixed
income.
5. Relying on Social Security.
Your Social Security
benefits are a valuable source of income during retirement, but with an
average benefit of just $1,237,** it is unlikely that Social Security
will be able to cover all your retirement expenses. Before you retire,
visit www.socialsecurity.gov to find out what benefits you should plan for.
6. Failing to research options to increase your savings.
The key to growing your
retirement fund is balancing risk and reward. Look into different
options and how they could fit your retirement goals. If you want a
low-risk option, check out fixed indexed annuities (FIAs) at www.FIAinsights.org.
Market-driven options like mutual funds or securities have higher risk,
but also the potential to really increase your savings. You can
research a variety of retirement plans here.
7. Individualizing your accounts.
If financial assets are
in one account under one name, it may be hard to access those funds in
the event of a family death. Having joint retirement accounts will
protect you, your family, and your finances in the event of an
unexpected death.***
8. Using your retirement funds before retiring.
Let the money in your
retirement fund grow, and if you need money earlier, consider other
sources. It is harder to save the closer you get to retirement, and many
retirement accounts have steep penalties for withdrawing early.
9. Failure to plan for taxes.
Keep in mind that you
will still have to pay taxes after leaving the workforce. Plan ahead so
you'll have enough money to pay your taxes as well as enjoy your
retirement.
10. Depending on a specific retirement age.
You may plan to work
until you're 65, but sometimes unexpected circumstances alter your
retirement plans. That is why it is important to start saving for
retirement early, so you won't be short of your retirement goals if you
are unable to work earlier than expected.
*Source: US News & World Report
**Source: Social Security Administration
***Source: USA Today
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