We all like to think we’ll be able to spend our retirement traveling the world and living a luxurious lifestyle, or at least a comfortable lifestyle where we don’t have to worry about money. But the truth is most people will never experience the retirement of their dreams because they made too many costly mistakes along the way.
Neal Frankle of the Wealth Pilgrim provides five common retirement planning errors that will probably ruin your chances of retiring in style:
Too much debt. Debt is quickly becoming as American as apple pie. See something you want? It’s so easy to just charge it and worry about the bills later. But you’ll be paying those bills for years to come. And when you add up all the finance charges in the end you will have paid many times the actual price of the item you purchased.
Spending Your Retirement Savings on College. We all want to do whatever we can to give our children a head start in life and a good education is one of the best ways to do so. But if doing so means jeopardizing your own future think twice. Your kids can always take out student loans and look for other side gigs to help finance their education but you can’t take out a loan to for your retirement.
No Emergency Plan. Having a well funded emergency fund to cover unexpected expenses and emergency plan to fall back on if you are ever out of work can mean the difference between landing on your feet and landing in the poor house. I’m all about preparing for the worst and diversifying income through multiple sources to protect against job loss.
No Long-Term Investment Strategy. There are lots of different investing strategies that can help you build wealth. Don’t just follow after the latest hot stock you hear about on the news. Do some research and decide on a strategy and then stick with it. Of course your strategy should be flexible enough to make adjustments on the fly, but jumping from one bandwagon to the next is a recipe for disaster.
No Retirement Plan. If you were planning on driving from New York to California, would you just hop in the car, start driving and hope for the best? Or would you spend some time mapping out a route, and planning for meals, hotels, and gas breaks? Well retirement is no different. It takes a long time to get there and there are plenty of potholes along the way. If you don’t have a plan you’ll end up broken down or out of gas somewhere outside Cleveland, and you can kiss any hopes of reaching your goal goodbye.[Yahoo Finance – US News and World Report: 5 Ways to Torpedo Your Retirement]