Most of the financial advice you see focuses on telling
individuals what they need to do to be a success in
But it's just as important – maybe more important –
for people to know what not to do.
Indeed, there are mistakes you can make that cannot
be undone. And it’s not exaggerating to call these
blunders significant, because they really can
considerably impact your retirement plan.
When people ask what they should do to help
safeguard their future, one should start by urging
them to avoid these three potentially damaging
1. Not having an emergency fund
Any plan for retirement should include an emergency
fund -- money you can access immediately.
What will you do if your health changes? What if your
spouse or one of your kids has an emergency? Will
you have money set aside to cover those costs?
A Bankrate survey found that just 37% of Americans
had enough in savings to pay for a $500 to $1,000
emergency. Most financial planners suggest having
enough cash to cover at least three to six months'
worth of living expenses.
It's also wise to have a flexible plan (and planner), so
you can make changes if your situation requires it.
When you fly, they show you where the exits are
before you ever leave the ground. If you take a cruise,
the crew always runs a lifeboat drill before you leave
port. You should have the same attitude toward your
2. Living too long
OK, so living too long isn't exactly a mistake, but
failing to plan for a long life is a huge one. Some
people think they won't make it to 70, so they don't
plan past it. Others truly believe they'll live to 100, yet
they don't plan at all.
The biggest fear we hear from retirees is that they'll
outlive their money. Maybe that's why so many
struggle with moving from the accumulation phase
(saving it up) to the distribution phase (taking
Your retirement income plan is key to making your
money last. And part of that is planning ahead and
budgeting for inflation, health care costs and possible
changes in your living situation as you age. There are
some great financial strategies and tools to help you
deal with these issues, but you have to move past
fear and denial and put them in place while it makes
sense – and while you still can.
3. Dying too soon
It's not something that most of us have a lot of control
over, but your passing can still be a burden on your
loved ones if you make the mistake of failing to prepare for it. Death takes a toll on those left behind,
emotionally, of course, but also – almost as certainly – financially. Pensions, Social Security and other
benefits are often lost or cut in half when a spouse
dies, though the survivor may live for decades longer.
How will your loved one get along without you?
Or what if you're disabled? An illness or disability that
requires nursing care can greatly affect the best-laid
There are products that can help back you up under
both circumstances – including some life insurance
policies that offer accelerated benefits if you become
ill or disabled but will pay death benefits if you stay
healthy and never require long-term care. Those
products can help preserve your assets, keeping your
estate intact and giving you the confidence you
deserve in retirement.
A solid plan can help mitigate even the worst
mistakes. Talk to your financial professional about
putting safety nets in place now, before you dive into
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