Top 10 Retirement Mistakes

Building a comfortable retirement is up to you. If you follow sound rules by saving as much as you can and maxing out your retirement accounts, your golden years will likely be pleasant.

However, many perils can stand between you and a successful retirement. Some of these easily avoidable mistakes can severely injure your plans, resulting in the need to work longer than you expected or spend less than you’d hoped.

Waiting to save

You might think that your earning potential is infinite and you can worry about retirement savings later. But time is an investor's top ally. If you start saving early, you will amass more than a person who saves much more but later in life.

Make life easy for yourself: Start saving now.

You should save at least 15 percent of your income as soon as you can. Make your savings plan automatic by having the money taken out of your paycheck.

The sooner you get used to living on 85 percent of your income or less, the better off your retirement plan will be.

Ignoring fees

Fees are like termites. They nibble imperceptible amounts in the short term, they never stop, and over time, they do enormous damage. Seek out and destroy fees that don’t add value to your retirement plan.

Bankrate.com’s Mutual Fund Fee calculator will help you see how much mutual fund fees add up over time, eating away at your retirement.

Not securing your information

You might think it’s the responsibility of your broker and bank to safeguard your digital information. And it is. But you’ll be the one suffering if your account information is stolen.

Lock all your digital information in a digital vault. Windows 10, for example, has a free digital vault.

Also use a password manager such as Lastpass. A password manager is software that stores all your passwords in an encrypted file that’s easy for you to access. And don’t sign in to your bank site from a public hotspot such as Starbucks or McDonald’s unless you’re using a VPN (virtual private network).

Prioritizing college savings over retirement

If you must choose between saving for the kids’ college fund versus your retirement, your retirement wins. Your children might decide not to go to college or might be able to get a scholarship or a loan. But you can’t borrow for your retirement.

Not diversifying your portfolio

Your uncle says he knows about a stock that will double your retirement fund. Sure he does. Never chase after hot stocks in your retirement fund, which is your long-term money. Diversified low-cost funds are tough to beat.

With that said, don’t play it too safe. Holding too many bonds or too much cash will all but doom you to subpar returns. Remember, you won’t get a decent return if you don’t take any risk. Even people in retirement should own stocks.

Waiting for the “right time” to invest

“I’ll put money in my 401(k) when the market is cheaper.” Those are words spoken by people who’ll never put money in a 401(k). They’ll either wait and wait for a crash that never comes or get too nervous to put in money when markets do fall.

When’s the best time to contribute to an IRA or 401(k)? Now.

Having inadequate insurance

No one likes to pay for life insurance or healthcare premiums. But skipping a key insurance plan at the wrong time could set you back so far you might never retire. Review your insurance plans, including an umbrella policy, and keep them current. You’ve worked too hard saving and investing to have it all wiped away by a natural disaster or accident.

Taking money from your accounts early

Retirement accounts are made for retirement, not for fixing a leaky roof or paying for an insurance deductible. Make sure you have an emergency fund to cover life’s unexpected events.

Yes, you can borrow from your 401(k) or take money out of your Roth IRA. But you shouldn't. This Vanguard calculator will tell you how much borrowing money from your retirement accounts will actually cost you.

Not checking your Social Security benefit

I hate to doubt the capability of the federal government to track the payroll deductions of millions of workers, but I do. Mistakes happen in recording contributions to Social Security. Not catching these errors can seriously reduce your benefit. It’s up to you to check. And while you’re at it, you can see what your Social Security payments would be so there are no surprises when you finally do collect.

Not thinking about income

Financial planners tell me that people are shocked the first day they don’t get a paycheck. When you’re working, you get accustomed to a steady income. But when you’re building a retirement plan, you need to think about where you’ll get the monthly income you need to pay your bills.

Building an income strategy is usually a multi-pronged approach. Your retirement accounts will likely pay interest and dividends. But for most people, that investment income will not be enough. You must also consider income you might get from a pension, and if not that, what kind of income stream you might line up by buying an immediate annuity.