Whether you’re in your 20s, 50s or anywhere in between, you should be making a solid retirement savings plan because the financial decisions you make every day can impact what your future looks like.
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Paying too much for education. If you’re approaching retirement age and you have kids getting ready for college or already enrolled, you’re probably feeling torn between saving for yourself and helping them graduate with as little debt as possible. Your retirement is more important! Your children can borrow money for school but you can’t borrow money to fund your golden years. Encourage your children to think about the financial repercussions of an expensive college and encourage considering less expensive schools or taking summer classes at a community college to give them a shot at graduating early. And try to avoid feeling guilty about this decision — though it may not seem that way now, in a few years your children will appreciate the fact that they won’t have to worry about you once you stop working.
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Being house poor. Housing is usually the biggest expense in a person’s budget and having a house that eats up too much of your monthly income year after year can be a killer. If you own your home, the equity that you’re building in it is a good means of forced savings but the cash that you’re paying to the bank in interest and to your town or city in taxes is not going toward your future. If you’re considering a change in location down the road anyway, think about bumping up your move to bolster your savings sooner. Downsizing or moving to an area with a lower cost of living (if that’s a realistic option) can have a huge impact on your ability to save.
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Mediocre benefits. You may feel fortunate to have a steady job with any benefits at all, which is a completely fair point. However, if you are looking at new jobs, don’t discount the importance of good benefits, especially if you have a family. Out-of-pocket medical expenses can be a huge drain, even on a relatively healthy family, and having an employer that offers financial incentives like employee stock purchase plans or a great match on retirement contributions can go a long way towards building wealth. When considering a new job offer, make sure you’re not focusing only on salary — take time to carefully compare the extras. Particularly if you are young and planning on staying at a company for a while, these seemingly little differences can make a big difference in your retirement savings over the long haul.
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