Saving for retirement is hard enough, but even once we’re on the right track, there are obstacles that can derail us – and unfortunately, we’re one of the biggest ones. Matt Balderston, CFP®, AIF® covers a couple of the most common behaviors we all should try to avoid.
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Saving for retirement is hard enough, but even once you’re on the right track, there are obstacles that can derail you. Unfortunately, we’re one of the biggest ones. Here are a couple of the most common behaviors we should try to avoid.
First, don’t draw from your retirement accounts. Expenses will come up throughout your life – like vacations, home remodels, kids’ educations, etc. – and your retirement accounts might seem like an easy source of cash. But don’t succumb to that temptation. You should treat your retirement accounts like they don’t exist. If you draw from them, not only are you reducing how much you have saved, but you’re losing future compound growth on what you took out. You’ll likely pay taxes on the withdrawals, too, and if you’re under 59 ½, there are often penalties on top of that.
The second one primarily affects people who are nearing retirement – often when they’re making the final push to put as much away as possible. That’s giving money to adult children. 79% of parents who gave money to their adult kids say if they hadn’t, they would have used it to improve their financial situation. I can’t hold it against anyone to want to help their kids, at any age, but if it’s jeopardizing your retirement, you should think twice. For a lot of people, giving their adult kids money now increases the chances they’ll be dependent on them later. I think it’s safe to say neither parents nor kids want that.
So, if you’re on the Express Line to your retirement and can keep these obstacles off the tracks, you’re much less likely to get derailed.
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CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.