Common Mistakes While Saving for Retirement and How to Avoid Them

Retirement! Many people talk about it. Many people anticipate it. Fewer people prepare for it. If you're among the few people who have chosen to prepare for it by saving for retirement, you have made the right decision. However, there are a lot of other things you need to consider while saving for retirement. There are many mistakes you could still be making, which would impede you from having your dream post-retirement life. I am about to show you a few powerful saving hacks, which, when applied, will go a long way in helping you travel the world instead of having to work as a Walmart greeter after retirement.

Here are some few mistakes while people save for retirement; avoid them.

Failure to Make Plans: This is the most typical mistake people make while saving for retirement. Many people do not have a definite saving plan. Remember; "If you fail to plan, you plan to fail." The right time to have a saving plan is now. To make that easy, you could contact your employer to take any retirement plan they offer. The method may be a pension, 401(k), IRA, or some other program.  I think this is a significant step towards having your dream after-retirement life.

Not Knowing How Much Money to Save for Retirement. This mistake is similar to the one mentioned above in the concept of planning. Many people do not have an idea of how much they need to save for retirement. People end up saving without a target amount in mind, and more often than not, they fail to save up to the required amount. You must have a good knowledge of how much money you may need to live comfortably during retirement so you could get the idea of how much you need to save and invest each month.    

Leaving Free Money on the Table: It is only right for you to take full advantage of whatever financial benefits are available in the programs provided by your employer. Many employers match the employees' contributions to a specific dollar amount, or by a certain percentage. As a result, the benefits their employees reap is proportionate to the number of contributions they have made. Hence, to avoid leaving money on the table (in other words, taking full advantage of the financial benefits of whatever programs are available), you have to ensure you make the maximum contribution.

Over-dependence on Social Security: There's a saying that goes, "Do not put your eggs in one basket." Many people concentrate all their retirement savings and investment on social security. It is rather unfortunate that in the end, many people see the mistake a little too late. You see, the highest a person can receive from social security is around $12,000 to $14,000 per year. If this is not enough to cover your expenses for retirement, you may want to consider other options like 401(k), IRA, or other saving options.

Retiring with a Mountain of Debt: The last anyone wants when it comes to retiring is a mountain of debt behind them, haunting them until it is paid off. Paying off debt before retirement makes it easier to get by on a fixed income.  

Take too Lightly the Cost of Healthcare: Many people underestimate the cost of healthcare in retirement. "43% of middle-income Americans are paying more for healthcare with Medicare than they expected they would" (CSR, 2012). Also, 2013 Fidelity research showed that an average 65-year-old couple would need at least $220,000. This amount will cover medical expenses throughout retirement because of the rising cost of healthcare each year. In addition to that, older people need more healthcare. Therefore, you have to make provisions for the price of healthcare in your savings.

There you have it some of the big mistakes people make when planning for their retirement years. In addition to these mistakes, if you've invested in the stock market, make sure you do not lack diversifying your portfolio and don't overreact to market volatility. Whether you've invested in the stock market or have a 401(k) through your employer, it is a good idea to consult with a financial planner who can help with your retirement planning.