It’s not just because you’ll spend so many years in retirement, either. It’s also because of how long you’ll save for it.
So it’s understandable that no one wants to make any unnecessary mistakes where the planning process is involved.
Nonetheless, there is some very popular retirement advice out there that does far more harm than good.
3 Pieces of Retirement Advice That May Be More Harmful than Helpful
It’s okay to keep an open mind about saving for retirement, but you need to think long and hard about any changes you decide to make once you have a plan in place. These three popular pieces of retirement advice should serve as good examples of how easily people can be misled about something so important.
1. You Can Just Keep Working When You Retire
This is a good example of retirement advice that is bad but well founded.
Most people will have no problem earning an extra income when they retire, especially when you consider the gig economy.
It’s also true that many retirees actually prefer to work some kind of job during their Golden Years.
That said, just assuming this will be an option – much less a pillar in your retirement plan – is a huge mistake.
First of all, it’s incredibly difficult to accurately estimate how much you’ll be able to make once you retire. Secondly, you need to think about your health. A lot can happen that would keep you from earning that extra income once you’ve retired, which would do a lot of damage to your plan.
2. Pay Off Your Mortgage Before You Retire
Again, this retirement advice stands on firm ground. Who wants to bring debt into retirement, a time when most people will be spending more money than saving?
However, everyone has different mortgages, so this advice may be a very bad fit for your retirement plan.
If your mortgage carries a very low interest rate, your savings could be more impactful pursuing the higher yield potential in investments. That may do a lot more for your retirement plan than paying down a minor mortgage.
3. Reduce Your 401(k) Contributions
Saving for retirement almost always involves a 401(k), so this is especially bad advice. Unfortunately, it has proven popular because it becomes very tempting when unexpected expenses arrive. All of a sudden, it might seem obvious that your 401(k) needs to suffer – albeit temporarily – while you take care of this new obligation.
Avoid cutting down on your contributions at all costs. At the very least, keep paying enough to earn the maximum employer contribution amount. Do not withdrawal early.
Mooney Lyons Can Offer Real Guidance
Did some of the above sound a little too familiar?
Many people have felt the same way. Plenty have taken that kind of advice, too, and had to work extremely hard to undo its damage.
If you’d rather be more informed and financially confident knowing your retirement plan is sound, Mooney Lyons can help. Contact us today to learn about all the ways we help our clients pursue their goals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principle.