(4) Failure To Take Full Advantage of Tax Breaks
It is one of the significant retirement investment mistakes to avoid. Several types of tax-favorable investment options for retirees are available such as 401 (k) plans, & individual retirement plans (IRAs), etc.
They may provide tax-deferred earnings to compound. Additionally, traditional plans can provide you immediate tax break on your taxable income every year.
According to Anthony Webb, a senior research economist at the Center for Retirement Research at Boston College, about less than one-half of full-time, private sector workforces have access to workplace retirement plans & out of those about 20% choose not to enroll.
It is a great opportunity to invest in a plan in which your employer is matching a portion of your contribution. Thus, you should never fail to take full advantage of an opportunity that adds value to your investments or tax breaks.
(5) Not Saving Enough Money
It is one of the critical retirement planning mistakes to avoid. Once you calculated the amount necessary to save for your comforts in old age, you need to figure out the best & optimum amount to contribute for your future needs.
According to Webb, average contribution rate for retirement is 6% (from employee) plus 3% (i.e. 50 % match from employer’s contribution) is equivalent to 9% of salary contribution.
If an employee started contributing at an age of 22 years than it might possibly be enough amount for a comfortable retirement.
But, if gaps are present perhaps due to a late start or uninsured health problems, or even due to prolonged unemployment than 9% annual contribution is not enough for retirement.
Your delay in contribution will just raise the percentage of income needed to save. It will also increase the leverage as well as risk required to achieve the same financial goals. Thus, you should start saving for old age early & aggressively.
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