9 Things You Should Avoid Before Retirement To Ensure A Worry-free Life
Retirement signals the beginning of a new life journey, but it can also turn into a disaster without the right planning. To help you avoid some costly mistakes and enjoy a worry-free lifestyle, here are 9 things you shouldn't do before retirement. Please click through to find out.
1. Don't Claim Your Social Security Benefit Too Early
Don't start Social Security Benefit the moment you are eligible. Because your monthly payment at full retirement age (66 or 67) will be about 30% higher than at age 62. If you wait until age 70, your benefit will be another 32% higher than at your full retirement age.
2. Don't Overlook Tax Deductions
People have come up with different ways to invest for their retirement, but many fail to claim certain tax breaks that could easily boost their savings. You can save money much quicker if you choose tax-favorable investments like 401K plan or IRA.
3. Don't Withdraw From Your 401K
If you take money out of 401K before age 59½, you may face stiff tax consequences and penalties for it. Even if you are allowed a hardship withdrawal, you won't be able to pay into it for the next 6 months. So it's better to let the money sit and grow until you retire.
4. Don't Get Sucked In Risky Investments
Risky investments are likely to bankrupt you as they are to make you wealthy. Since you'll need more cash when you get older, your investment will have little chance of growing back once you withdraw funds in a down market.
5. Don't Hoard Your Money
Risky investment can be a wise choice to achieve a handsome reward as long as it has been carefully calculated. Even if the worst scenario happens, pre-retirement allows you to recover quickly from failure and start all over again. No risk no reward, right?
6. Don't Postpone Saving For Retirement
Statistics have shown that people who start saving early will have a decent amount of money in retirement, while those who put it off need to save dramatically more to catch up. So start as early as you possibly can and it will be much easier.
7. Don't Ignore The Value Of Diversification
Diversification strategies help reduce the risk to your invested capital and generally lead to superior results. So it's better to spread your money across a variety of investments such as stocks, bonds, real estate and commodities.
8. Don't Get Caught Up In Wishful Thinking
For many people, retirement is a milestone that they could do whatever they want with their lives. But to make it happen, you should first figure out the lifestyle you desire and then establish a budget for it. Don't get blinded by dreams and do nothing to make them come true.
9. Don't Wait Until Retirement
We all live once, so enjoy while you can. In case that you don't have enough energy or money to do what you have planned for your perfect retirement, embrace life with what you have right now and live a meaningful life out of it.