Research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.
SmartAsset’s free quiz simplifies the time-consuming process of finding a financial advisor. A short questionnaire helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest. Advisors are rigorously screened through our proprietary due diligence process.
Being aware of these seven common blunders when planning for retirement can help you find peace of mind and avoid years of stress.
7 Crucial Retirement Planning Mistakes
Taking Social Security Before 70
- Maximum Social Security retirement benefit kicks in at age 70.
- Payments increase by 8% each year you wait after 62.
- Consult a financial advisor to figure out how and when Social Security benefits should factor into your unique retirement plan.
Borrowing Against Your Retirement (Unless It’s an Emergency)
- Interest you pay on the loan is paid back into the account, but you’ll miss out on potential returns.
- You risk having to pay income taxes and withdrawal penalties if you’re unable to pay it back within five years or before leaving your job.
- Always speak with a financial advisor before considering this option.
- Get matched with up to three fiduciary financial advisors by taking this free quiz.
Tapping Into Your 401(k) or IRA Before RMDs
- You can start withdrawing money from your 401(k) when you turn 59 1/2.
- You don’t have to start taking Required Minimum Distributions until you turn 72, so your money can keep growing with compound interest.
Tapping Into Your Roth Before Exhausting Other Options
- Put off withdrawing money from your Roth IRA as long as possible.
- You paid taxes up front so you can take money out of your Roth IRA and it won’t count as taxable income.
- You don’t need to take Required Minimum Distributions.
- This account can keep growing for as long as you don’t touch it.
Hiring an Advisor Who Is Not a Fiduciary
- A fiduciary is ethically bound to act in another person’s best interest.
- All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries.
- If your advisor is not a fiduciary, take this free quiz to find an advisor who has a legal obligation to act in your best interest.
Not Considering Your Spouse’s Social Security Benefits
- You can delay claiming your own Social Security benefits and reap half of your partner’s payout.
- Your marriage (current or not) has to have lasted a minimum of 10 years (although several conditions apply).
- Beneficial if your spouse was a higher earner, since the calculation for spousal benefits will be based on the spouse’s salary.
- Widows and widowers are also able to benefit from a spouse whose earnings were higher.
Planning for Retirement on Your Own
Financial advisors are well-versed in retirement planning.
They can help you:
- Determine where to invest.
- Decide when to elect your benefits.
- Determine the proper order to withdraw funds.
- Avoid costly tax traps.
Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.
Our free quiz makes it easy to find a vetted advisor so you can make an informed decision and choose the right one for you. Now you can get matched with up to three fiduciary investment advisors that are vetted and subject to our due diligence criteria. The entire matching process takes just a few minutes.