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5 Ways People Sabotage Their Own Retirement [View all]
Very interesting, common-sense stuff.
2. Waiting too long. Financial advisers find that people often delay saving for retirement until their debts are paid off, but that can mean sacrificing many years of compounding. Instead, advisers usually recommend opening a tax-advantaged retirement account as soon as you start working, even if you save just a small amount each pay period. Saving those small amounts--$25 per paycheck, for example--can help get a retirement account going, and employer contributions can help even more.
...
4. Investing too conservatively, or too aggressively. Twenty-somethings shouldn't have most of their retirement investments in bonds, or other conservative assets that barely keep up with inflation, and conversely, soon-to-be retirees should not have most of their nest egg in the stock market, which can drop unexpectedly at a moment's notice. Advisers generally recommend shifting into a more conservative portfolio as you age; a 30-year-old might have 30 percent in bonds and 70 percent in stocks while a 70-year-old would have the reverse mix.
5. Failing to anticipate a long life. With lifespans on the rise, retirees can count on living another 20 or 30 years--or longer--post-retirement age. That means they need even more savings than their parents' generation. Rising healthcare costs also eat up those funds, so erring on the side of a bigger retirement fund is essential.
If you find all this advice confounding, consider this strategy: Just save 18 percent. That's the savings rate a medium-earner ($43,084 in 2010) would need if he or she starts saving at age 35 and plans to retire at age 68 (assuming a 4 percent return on investments), according to the Boston College's Center for Retirement Research.
...
4. Investing too conservatively, or too aggressively. Twenty-somethings shouldn't have most of their retirement investments in bonds, or other conservative assets that barely keep up with inflation, and conversely, soon-to-be retirees should not have most of their nest egg in the stock market, which can drop unexpectedly at a moment's notice. Advisers generally recommend shifting into a more conservative portfolio as you age; a 30-year-old might have 30 percent in bonds and 70 percent in stocks while a 70-year-old would have the reverse mix.
5. Failing to anticipate a long life. With lifespans on the rise, retirees can count on living another 20 or 30 years--or longer--post-retirement age. That means they need even more savings than their parents' generation. Rising healthcare costs also eat up those funds, so erring on the side of a bigger retirement fund is essential.
If you find all this advice confounding, consider this strategy: Just save 18 percent. That's the savings rate a medium-earner ($43,084 in 2010) would need if he or she starts saving at age 35 and plans to retire at age 68 (assuming a 4 percent return on investments), according to the Boston College's Center for Retirement Research.
There's more at this link:
http://finance.yahoo.com/news/5-ways-people-sabotage-own-135934028.html
I find it interesting that the #1 act of self-sabotage they list is having children. Of course, there are people like my sister who claim that her daughter IS her retirement plan. I wonder how many people eschew saving for their own retirement in favor of paying for their kids' college? Bad idea.
Anyone out there saving 18% of their income?
Me neither.
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