Employees tend to make the same retirement-planning blunders over and over again. Guest poster Rick Pendykoski, the owner of a retirement-planning firm, outlines the Top Ten – so HR pros can help people steer clear. 


It’s understood that nobody is responsible for retirement planning strategy of every employee in the company. However, in cases where there is a company sponsored plan already in place, an employee is entitled to knock on HR’s door for guidance.

Being human, it is quite natural to make mistakes, especially when it comes to managing personal finances. However, if a mistake costs somebody their lifelong savings, it’s definitely a matter of concern.

When it comes to retirement savings, the common mistakes employees make are:

  1. Not saving at the right time: It has been seen in many companies that employees do not start saving earlier in life, in their twenties and thirties, and tend to begin much later. If such a trend is followed, it will not only hamper the investment plans of an employee, but will also result in shorter and lesser gains.
  2. Missing out on Annuities: Loosing out on a guaranteed source of income at the later part of life is one of the biggest mistakes committed by an employee. It is better to insure the income with some form of annuity that will help in the future.
  3. Forgetting the 401k account with the previous employer: In today’s era, an individual usually does not work in one organization all of his/her life (other than federal employees) as changing jobs is necessary for their growth in the industry. However, when employees join a new firm, they tend to forget about the 401K account left with the previous employer, which results in loss of savings. Hence, it is highly important for employees to keep amalgamating these accounts together so that the funds can be used for different retirement investments.
  4. Less contribution to the employer’s plan: Employees generally make the mistake of contributing ‘just enough’ to the employer’s plan, which is not a good idea if there’s a probability of contributing more. By doing so, they will be able to save more at the end of the day.
  5. Low debt clearance: Not clearing your credit card bills and home loans on time can also eat your retirement investments. So, start working on debt clearance before you retire in order to have a sustainable income.
  6. Not conducting a financial rain check: There are many employees who are not able to plan their monthly expenses and have no clue where they are spending their money. Consequently, they imbibe poor saving habits as at the end of the month, there’s nothing left to be kept aside. Therefore, in order to ensure a better saving pattern, it is necessary to do a rain check every now and then.
  7. Overspending Habit: If you are a spendthrift, you will have a hard time saving. Eventually, your limited income will run short and nothing will be left for your retirement. Hence, reduction in expenses is the best way of reserving your finances and saving for your golden years.
  8. Living paycheck to paycheck: Every company has employees who live from paycheck to paycheck and do not have any saving or investment plans. Consequently, at the time of retirement, these people face a lot of trouble initiating funds.
  9. Relying on leftover savings: On the other hand, there are employees who tend to put whatever is left with them at the end of the month into savings. However, if there is no leftover at the end of a month, there are no savings as well. Therefore, it is important to plan prudently and keep an amount specially designated for retirement savings.
  10. Overlooking economic conditions: The economic condition of the country would not remain the same by the time an employee retires. Inflation, trades, stocks and securities change according to the economic condition. Keeping an eye on the economic condition is very important when investing in any retirement plan as the cost of everything will multiply over the years. To ensure that your golden years are financially comfortable, you need to plan your finances, according to the expected market condition at that time.

Retirement is the time to relax after all the years of hard work and labor you put in. And, you can guarantee that with a better and safer investment plan for your retirement. Therefore, it’s best to plan now to have a secured later.

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly blogs at Biggerpocket, SocialMediaToday, NewWireInvetor, MoneyForLunch and his own blog at his company’s website.

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