Ask any retiree if they wish they had done anything different to be financially ready for life after work, and you’ll probably hear some regrets. Planning for a future we can’t predict but know is coming can be tricky. However, you can take steps now to steer clear of those feelings of regret later in life. Here are some suggestions for things to avoid:
- Not saving enough – Many financial advisors recommend saving enough to cover 70% to 90% of your pre-retirement annual income to maintain your standard of living. Social Security benefits and pension income may not be enough to reach that mark, so be sure to work toward closing any gap by saving at the level you need to live the retirement you want.
- Not saving soon enough – It’s obvious but true: The earlier you start saving, the more likely you’ll reach your retirement income goals. Over time, the power of compound growth — where any earnings from your investments get reinvested to generate potentially even more growth — can work to your advantage.
- Missing opportunities to save more – Don’t be discouraged if you’re getting a late start on saving for retirement. If you’ll be 50 or older this year, catch-up contributions may help you reach your savings goals as you near the end of your career. In 2023, you can contribute an additional $7,500 to your plan.
- Not investing appropriately – Does your mix of investment types (also known as asset classes) match your risk tolerance and planned retirement timeline? Investing either too conservatively or too aggressively can put your retirement income goals in jeopardy. It’s critical to find the right balance of investment risk and return potential in your asset-allocation strategy.1
- Trying to time the market – When you see your retirement account balance drop, you may be tempted to shift money out of stock funds into less risky investments with lower risk — and reinvest when the market recovers. This is known as “timing the market.” Before you do this, remember that no one knows when the market may rebound and missing out on the market’s best days. If you aren’t invested in stocks when the market recovers, you may have “locked in” your losses by missing out on potential gains.
Talk to Chip Richardson, our Henrico County plan representative about how you can avoid retirement planning regrets and achieve the bright financial future you want.
John “Chip” Richardson
Phone: (804) 501-5233
Mobile: (804) 221-1474
Email: chip.richardson@empower.com
1 Asset allocation, diversification, and/or rebalancing do not ensure a profit or protect against loss.
