Retirement Investment Mistakes

Retirement Investment Mistakes You Want to Avoid

Updated on Dec 03 2018


Retirement investment mistakes are not only frustrating, they are costly and can be detrimental to your future. Retirement income management is strategizing how your retirement savings will provide enough income to meet your unique needs. Here are five big retirement investment mistakes you want to avoid.

The last thing you need is retirement investment mistakes. To maintain financial health after you retire you need to set up or adjust a specific retirement portfolio that’s geared for maintaining your retirement lifestyle.

5 Big Retirement Investment Mistakes

Retirement conjures a myriad of emotions; from excitement and jubilation to fear, panic, anxiety and stress. According to a newly released report from Gallup, 46 percent of U.S non-retirees believe they will not have enough money in retirement. For those already retired, the attitude is much more positive with 78 percent reporting that they have enough money to live comfortably. Many Americans are unsure how to spend their money comfortably in retirement, though.

Here are a few retirement investment mistakes to avoid so you can enjoy your retirement with financial peace of mind:

1. Trying to Time the Market

Every financial expert will tell you that it doesn’t work to try to time the market. Unless you have a crystal ball that predicts the future, chances are you will probably lose money if you try to go in and out of the market based on your own predictions. In fact, according to personal finance expert, Joel Johnson, the average person who tries to time the market ends up selling when it’s low and buying when it’s high. Impulsive decisions are generally the worst kind of decisions in life as they are driven by fear and greed, so they should be avoided when investing. An expert financial advisor can help you with your retirement portfolio and mix of investments for where you are in life.

2. Borrowing from Retirement Funds

It is not a good idea to take a loan against your 401(k) or any retirement account, for that matter. Even if your company sanctions as an attractive part of the benefit plan, try to find other ways to pay for the things instead of sacrificing compound interest from your retirement funds.

3. Switching 401(k) Funds

Switching funds doesn’t always produce the best outcomes. Typically, people analyze how funds performed during the year, end up buying those funds and pay for funds that don’t perform the same way in the comping year. For example, those funds could be involved in a downturn, so you have to remember that past performance doesn’t guarantee future performance. What seems like a wise decision based on past performance can literally cost you retirement income. Set up an allocation as part of your retirement plan and be patient.

4. Being Impatient

Impatience is an investor’s enemy. According to Warren Buffet, “the stock market is where impatient people transfer money to patient people.” Patience is very important when it comes to investing and focusing on long-term results, which can help you reach your long term goals. An expert financial advisor or fiduciary can help you create a portfolio that makes sense for your unique situation. Financial guru, Larry Swedroe, recommends building a low-cost diversified portfolio and sticking to the plan without making rash decisions.

5. Not Having a Proactive Retirement Plan

Developing a strategic financial plan is very important to align your spending habits, income and retirement goals. A financial advisor can help you develop a retirement portfolio that makes sense based on your lifestyle needs and investment time horizon.

Basically, you need a retirement that factors-in all elements of your assets like your savings, Social Security, retirement accounts as well as taking your debt into consideration. Long-term healthcare costs need to be addressed as well as emergencies as typically those costs are what cause people to get behind on their retirement savings and goals.

Making smart decisions to help you prepare for your financial future will help you prepare for the unknown. It’s much better to be proactive than reactive which is why hiring a professional can help you build a financially secure retirement portfolio that will not only fund your future lifestyle in retirement, but will also give you peace of mind.

Need a financial advisor?

100% free consumer service


Back to Top