I can't stress this enough, you need a plan for retirement. Our retirement is going to look very different from our parent's retirement. Which means, we have to have a plan in place and stick to it. Watch the clip below, courtesy of Fox 59, to hear me explain the three most common mistakes people make with their 401(k)s.
Are you starting to feel the financial stress of retiring? Then be sure you aren't making these common 401(k) mistakes.
1) The biggest mistake you can make when it comes to your retirement is not contributing to your 401(k). Start contributing today. We all have excuses, but I'm telling you to ignore all of those and just start contributing. I know you want to get out of debt but the tough answer is that you need to be paying down debt and contributing to a retirement plan. Use my Ideal Budget to help find the places where you can make sacrifices.
2) Taking out a loan from the 401(k) you've worked hard to build up. If I had my say, taking out a 401(k) loan would not be an option. Don't sacrifice your future for whatever 'need' you have now. Just don't do it. Contribute to your 401(k) and then forget about it, don't think of it as a savings account for a rainy day.
3) Cashing out a 401(k) early. Again, just don't do it. This is money for your retirement, nothing else.
*Bonus tip: Don't get over-invested in your company's stocks. No more than 10% of the value of your 401(k) should go into your company's stock.
The ability to retire is no longer a right but a privilege. If you want to retire you will have to use your budgeting skills to meet your goals. Don't know what your goals should be? If you're a pre-retiree (within 10 years of retirement), be sure to checkout my book Mock Retirement to help make sure your retirement plans actually make sense.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.