10 Mistakes for Moms to Avoid When Saving for Retirement
Whether
you’re a working mom or stay-at-home with the kids, saving for
retirement can often be put on the back burner. Between staying on
budget and wanting to build college funds, finding a little
extra to invest in your retirement can be a daunting task. Moms are
usually the driving force in the household when things need to get done.
Here are some tips for mom's to avoid these common retirement planning
mistakes when they’re considering their financial
future.
Biggest mistakes when saving for retirement:
1. Waiting
to save.
Start
saving early so your money has time to grow. If you’re worried about
sticking to your budget, start small. Even $20 a week can go a long way
over time, and when your budget allows, contribute
more.
2. Failing
to plan.
It is
important to understand expenses for the type of lifestyle you want, so
you can save enough money. Figure out what your retirement goals are,
and start planning your retirement finances
now. There are helpful interactive calculators that can help you
determine how much you will need in retirement.
3. Saving
for college before retirement.
Moms
want the best for their children, but there are many factors when
deciding which savings take priority. Consider this: Your kids have
access to loans and scholarships to help pay for college,
but if you don’t save enough money for retirement, you may not be able
to afford your expenses.* You could also have separate savings for college and retirement, and contribute to both. Even if you’re contributing
less to each than you would like, the longer the money is in the account, the more the interest will accumulate.
4. Retiring
with a lot of debt.
Find a
way to pay down or pay off consumer, student loan, and mortgage debt
before you retire. These recurring payments will be harder to make when
you’re on a fixed income.
5. Relying
on Social Security.
Your Social Security benefits are a valuable source of income during retirement, but with an average benefit of just $1,237, ** it
is unlikely that Social Security will be able to cover all your retirement expenses. Before you retire, visit www.socialsecurity.gov to
find out what benefits you should plan for.
6. Failing
to research options to increase your savings.
The key
to growing your retirement fund is balancing risk and reward. Look into
different options and how they could fit your retirement goals. If you
want a low-risk option, check out fixed indexed
annuities (FIAs) atwww.FIAinsights.org.
Market-driven options like mutual funds or securities have higher risk,
but also the potential to really increase your savings. You can
research a variety of retirement plans here.
7. Individualizing
your accounts.
If
financial assets are in one account under one name, it may be hard to
access those funds in the event of a family death. Having joint
retirement accounts will protect you, your family, and
your finances in the event of an unexpected death. ***
8. Using
your retirement funds before retiring.
Let the
money in your retirement fund grow, and if you need money earlier,
consider other sources. It is harder to save the closer you get to
retirement, and many retirement accounts have steep
penalties for withdrawing early.
9. Failure
to plan for taxes.
Keep in
mind that you will still have to pay taxes after leaving the workforce.
Plan ahead so you’ll have enough money to pay your taxes as well as
enjoy your retirement.
10. Depending
on a specific retirement age.
You may
plan to work until you’re 65, but sometimes unexpected circumstances
alter your retirement plans. That is why it is important to start saving
for retirement early, so you won’t be short
of your retirement goals if you are unable to work earlier than
expected.
**Source: Social Security Administration
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