According to Forbes, by 45 years of age, about three times your annual salary should be socked away in savings. Are you on track?
Not having a healthcare fund to use in retirement
Medicare doesn’t cover all expenses, and co-pays can be pricey, so include plenty of money in your budget for health expenses. Even minor or treatable illnesses can be expensive, and even if you’ve spent your lifetime being very healthy, some degree of health expenses will likely appear during retirement. Plan for the worst and have plenty budgeted for healthcare costs.
Not moving away from riskier investments
Assuming you’ve accrued a significant amount of savings at this point, it can be time to move toward a slow and steady approach to retirement investments. Generally, it’s safer to invest in higher-risk, potentially higher payoff stocks in one’s 20s and 30s when there is less to lose. In your 40s, it's better to take a more conservative strategy.
Not maxing out retirement contributions
If you’re in your 40s and feeling financially secure, it is time to start contributing more to your retirement fund.
Having too much credit card debt
If you have large amounts of revolving credit, it’s time to stop pretending that eventually credit cards will be paid off, especially if “eventually” is still some undefined time in the distant future. The cost of interest on these debts is probably enormous, and it’s time to pay them off.Consider significantly upping your monthly payment amounts, or consolidate the debts into a lower-interest home equity loan if you have significant equity in your home, and take the loan for only the amount you need to pay off the cards.If you do decide to use home equity to pay off the debt, develop a payment plan to get the loan paid down long before retirement. Once the cards are paid off, it shouldn’t hurt your credit score to close a few of the accounts up. To keep an active credit history, you’ll want to keep using a few of them and paying them off right away. Any large purchases should be paid off within three months to avoid paying too much in interest.
Not having significant equity on your home
Most people plan for retirement assuming they’ll no longer have a mortgage payment in their golden years.
Living without an emergency fund
Maybe it’s been a while since a major expense has come up which took your wallet by surprise, and you’ve managed to always have enough set aside for problems. However, if you don’t have a separate fund set allocated just for emergencies, one that isn’t also used for vacations and car repairs, now is the time to set one up.
Not purchasing life insurance now
The cost of opening a new life insurance policy goes up with age, so it’s best to start a with a good policy early on. It’s also a good idea to increase the amount of coverage on existing policies before you turn 50, when doing so will likely cost much more. Take advantage of being in a lower risk pool and get covered.
Not having a healthcare fund to use in retirement
Medicare doesn’t cover all expenses, and co-pays can be pricey, so include plenty of money in your budget for health expenses. Even minor or treatable illnesses can be expensive, and even if you’ve spent your lifetime being very healthy, some degree of health expenses will likely appear during retirement. Plan for the worst and have plenty budgeted for healthcare costs.
Not moving away from riskier investments
Assuming you’ve accrued a significant amount of savings at this point, it can be time to move toward a slow and steady approach to retirement investments. Generally, it’s safer to invest in higher-risk, potentially higher payoff stocks in one’s 20s and 30s when there is less to lose. In your 40s, it's better to take a more conservative strategy.
Not maxing out retirement contributions
If you’re in your 40s and feeling financially secure, it is time to start contributing more to your retirement fund.
Having too much credit card debt
If you have large amounts of revolving credit, it’s time to stop pretending that eventually credit cards will be paid off, especially if “eventually” is still some undefined time in the distant future. The cost of interest on these debts is probably enormous, and it’s time to pay them off.Consider significantly upping your monthly payment amounts, or consolidate the debts into a lower-interest home equity loan if you have significant equity in your home, and take the loan for only the amount you need to pay off the cards.If you do decide to use home equity to pay off the debt, develop a payment plan to get the loan paid down long before retirement. Once the cards are paid off, it shouldn’t hurt your credit score to close a few of the accounts up. To keep an active credit history, you’ll want to keep using a few of them and paying them off right away. Any large purchases should be paid off within three months to avoid paying too much in interest.
Not having significant equity on your home
Most people plan for retirement assuming they’ll no longer have a mortgage payment in their golden years.
Living without an emergency fund
Maybe it’s been a while since a major expense has come up which took your wallet by surprise, and you’ve managed to always have enough set aside for problems. However, if you don’t have a separate fund set allocated just for emergencies, one that isn’t also used for vacations and car repairs, now is the time to set one up.
Not purchasing life insurance now
The cost of opening a new life insurance policy goes up with age, so it’s best to start a with a good policy early on. It’s also a good idea to increase the amount of coverage on existing policies before you turn 50, when doing so will likely cost much more. Take advantage of being in a lower risk pool and get covered.
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