Dayton Daily News

How to Ruin Your Retirement

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Too many people are preparing for retirement solely by saving some money and hoping it will be enough. That can lead to disaster. Improve your retirement by avoiding the following common mistakes:

1. Having no clue about how much money you’ll need. Online tools at apps.finra.org/calcs/1/retirement and ssa.gov/retire2 can help you plan.

2. Not saving enough. Saving 10 percent of your salary often isn’t enough. Fifteen to 20 percent might be needed to reach your goals.

3. Ignoring asset allocation. Your long-term money is likely to grow fastest in stocks, not bonds or bank accounts. Consider low-fee index funds for bonds and stocks.

4. Cashing in your 401(k) early. A third or more of workers do this, often when changing jobs, and it leaves them less to live on later. Instead, consider rolling over that money to an IRA, where it can continue growing in a tax-advantaged manner.

5. Spending your retirement nest egg too quickly. Don’t risk running out of money while you still need it. Have a withdrawal plan that will make your money last. Consider fixed annuities. (Variable and indexed annuities are more problemati­c.)

6. Retiring too soon. Retire early only if you have enough money to do so. If you’re in your 60s, you still may have two or three decades ahead of you, so plan conservati­vely and be sure to factor in health care, which could cost you thousands of dollars annually. Explore part-time or project work that you might take on in retirement.

7. Getting bad, or no, advice. Retirement planning is a huge and critical undertakin­g, and there’s no shame in seeking help with it. Favor fee-only financial advisers over ones who might have conflicts of interest, through earning sales commission­s. (Find fee-only advisers at napfa.org.)

Learn much more at fool.com/ retirement/index.aspx and money.cnn.com/retirement, and try our “Rule Your Retirement” newsletter for free via fool.com/

services. It offers solid, concise advice, along with stock and fund recommenda­tions.

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