(8) Avoiding Rollover Of IRA & 401(k)
It is one of the biggest & expensive retirement investment mistakes to avoid. This mistakes usually occurs when switching from one job to another. When working in a company, employees save money for retirement.
This is done either in a company-sponsored 401(k) or an Individual Retirement Account (IRA). Both plans involve setting aside a percentage of income in a tax-deferred account.
According to a study, 70% of workers in their 20’s after switching their job prefer to cash out their 401 (k)s instead of roll over.
Once you have saved your money in a tax-deferred account never take it out until before you are 59 ½ years old otherwise you have to pay a 10% penalty.
You just need to roll over your account into an IRA instead of cash out the money. This will help you to prevent lose of valuable interest as well as preventing destruction of the compounding process.
Sometimes, you can also leave the money in your old plan or transfer it to the old age plan offered at your new job.
[Read Also: 10 Wonderful Reasons To Support An Early Retirement]
(9) Underestimating Additional Health Care Costs
It is one of the popular retirement planning mistakes to avoid. Employers are gradually eliminating retiree health coverage provided to their employees. Similarly, Medicare is also not covering certain medical services such as routine eye exams, eyeglass, dental care, & hearing aids.
Medicare will only cover up to 100 days of nursing home care. However, additional long term care including tests & procedures will require you to pay for it out-of-pocket.
Image Source: Shutterstock