Early retirement may be within reach, but financial missteps can derail your plans. Learn how to avoid costly errors and secure a comfortable retirement.
As the traditional retirement age of 65 looms closer, many Americans are eager to hang up their hats and enjoy the fruits of their labor. However, a sobering reality check reveals that nearly half (45%) of those who retire at this age may not have sufficient funds to cover their costs in their golden years.
A recent research report by Morningstar sheds light on this concerning trend, which includes income from Social Security benefits and retirement accounts. The findings are a wake-up call for anyone planning an early exit from the workforce.
Even if you’re diligently contributing to your retirement accounts, it’s essential to examine your other financial behaviors to ensure you’re on track for a secure retirement. Some money mistakes can have severe consequences, making it crucial to avoid them in the coming year if you hope to retire by 60.
Here are three common errors to steer clear of:
Mistake #1: Overindulging Your Adult Kids
It’s natural to want to support your children financially, especially during their transition to adulthood. However, overhelping can come at the expense of your future retirement income. A recent Pew Research Center report found that 18% of parents surveyed admitted that living with their young adult children had hurt their finances.
The solution is to prioritize your financial well-being while still supporting your loved ones. Review your budget and determine how much you can reasonably afford to help your child, then have an open conversation about the help you can offer and what you can’t.
Mistake #2: Buying Luxury “Toys”
Purchasing a luxury item like a fancy car or boat may seem like a treat, but it comes with significant long-term costs. Maintenance, gas, insurance, and repairs will eat into your budget now and during your retirement years. Consider redirecting these funds towards your retirement accounts instead.
It’s not about depriving yourself of the finer things in life; rather, it’s about getting clear on your priorities. Are you willing to work longer to afford a luxury item, or would you rather prioritize early retirement?
Mistake #3: Neglecting Your Retirement Savings
Failing to prioritize your retirement savings can have devastating consequences. If you’re not consistently contributing to your retirement accounts, you may find yourself short on funds when the time comes.
Take proactive steps to ensure you’re on track for a secure retirement. Review your budget and financial goals, then make adjustments as needed to maximize your retirement savings.
By avoiding these three common mistakes, you can significantly increase your chances of securing a comfortable retirement by 60. Remember, early retirement is within reach, but it requires careful planning and discipline. Don’t let financial missteps derail your plans – take control of your finances today and set yourself up for a secure tomorrow.
Source: Yahoo News
