Creating and following a to-do list can help in planning. Sometimes a “do-not-do” list can be equally important.
During National Save for Retirement Week, consider reviewing these common pitfalls with your clients to position them for a more financially secure retirement in the future:
1. Impulse investing: Avoid investing based on a whim or a tip. Don’t invest a certain way just because a friend or colleague does. Instead, be thoughtful and strategic.
2. Not having a vision for retirement: Take some time to thoroughly think about what you want your retirement years to be like. How do you want to live and what do you value most?
3. Not paying yourself first: Retirement savings should be a top priority. Put money aside with every paycheck. It’s easy to do through payroll deduction or a similar automatic system.
4. Not taking advantage of time: Compound growth is like a gift from Father Time. Start saving for your retirement now and you gain an opportunity for tremendous potential growth. That way, you may not have to save significantly more later in your career, when many financial needs compete for your attention and your budget.
5. Not paying attention to risk: Risk and return tend to go hand-in-hand. Investments that offer higher potential returns, such as stocks, have elevated levels of risk. Conservative investments, such as money market funds or stable-value investments, fluctuate very little but offer limited growth potential. Think about risks as well as expected returns.