Your retirement may be years away but if you aren’t actively planning for it now, you could be facing years of regret. Just ask 60% of the seniors that took part in a recent study by the Lincoln Financial Group.
The company, which sells financial services products such as annuities, asked a group of seniors how satisfied they are with their retirement. At least 60% expressed regrets, saying they wished they had started saving earlier and put more away during their working years.
Among the regrets, 63% of seniors said they wished they had planned their investments to provide automatic income. Another 85% said they should have built their portfolios to deal with the unexpected, such as the recent surge in inflation and market volatility.
Financial advisers cite these mistakes as among the most common when it comes to putting together a retirement plan:
Not having a retirement plan
Not saving enough money
Not investing savings for maximum return
Not taking advantage of employer 401(k) matching
Not considering tax implications
Don’t put your investments on autopilot
Even people who are saving for retirement can run into trouble if they just put their portfolio on autopilot. John, of Sonoma, Calif., put all of his retirement funds into Schwab Intelligent Portfolios when he retired and pretty much forgot about it.
“Five and a half years later, I noticed that the S&P 500 had increased by 78% during that period,” John wrote in a ConsumerAffairs review. “The funds in my account had increased by 0%.”
How could that happen? John says 36.5% of his money was invested in stocks but he later realized that only 10% was in U.S. stocks. The rest was in emerging markets and international funds, both of which lost ground while U.S. stocks soared. And, it got worse.
“Almost 20% of my portfolio was in mortgage-backed securities, which had lost thousands of dollars,” John said.
Even if your retirement savings are in an account managed by a financial professional, personal finance experts say it’s wise to regularly monitor the account’s performance.
Brokers at Charles Schwab also say it’s smart to have an individual retirement account (IRA), even if you have a 401(k) account at work. While the employer’s account may have limited investment options, there are few limits to an IRA, such as the ability to invest some of your savings in gold.