Gary Begnaud of New Jersey, an Executive Vice President/Wealth Management, Financial Advisor at Begnaud Wealth Management Group of Janney Montgomery Scott, LLC is designated a Chartered Retirement Planning Counselor as well as a Certified Divorce Financial Analyst and has been serving clients for over 35 years. Gary Begnaud finds that many people in their 30’s and 40’s are often overwhelmed at the idea of saving enough money to retire one day and in this article; Begnaud gives tips on common pitfalls to avoid at this stage in life.
When people are young and just starting out in the workforce, retirement can seem far off in the distance. However, it happens faster than expected - and many are unprepared.
According to recent surveys, 48% of adults are not actively saving for retirement, and those that are, are contributing to an employer-sponsored 401(K) plan or a savings account.
On top of that, two-thirds of adults have not sought retirement planning advice from a professional, though an estimated 54% say they feel they would benefit from that kind of advice.
Preparation is key, and there is never such a thing as planning too early for retirement. Here Gary Begnaud of New Jersey presents some common mistakes younger workers may make in their retirement planning — and how to fix it.
Not Being Aggressive Early On
Yes, it’s difficult to focus on retirement when it's four or five decades away. But Gary Begnaud explains that starting early literally pays off.
Every single dollar put into a retirement plan or retirement savings when one is in their 30s will benefit from 10-20 more years of accumulated interest compared to what is put into retirement savings when one is 40 or 50. Start early and save as much as possible each month.
Additionally, if an employer offers a 403(b) or 401(k) plan, take advantage and save at least the minimum amount needed to trigger a match from an employer. With this approach, there are guaranteed returns.
Financial advisers also agree that if one can transfer a 401(k) over to a new job, it’s better than cashing it out. Gary Begnaud explains that if an employer does not offer such plans, consider starting an IRA which can be automatically funded by taking a certain amount out of a checking account.
Being Underinsured
Gary Begnaud reports that younger people tend to not prioritize insurance. It’s easy to ignore when one feels like it’s not needed if in good health and there isn’t a spouse or children to consider. But having insurance isn’t just a bonus — it’s vital.
One small medical emergency can be financially crippling and take retirement planning wildly off course. Renter’s insurance can get you back on your best financial feet quickly after a fire, flood, or theft. When there are kids and a spouse, term life insurance may be the best way to protect them if the unimaginable happens.
Not Thinking Strategically About Investments
Gary Begnaud of New Jersey explains that a Roth IRA or traditional IRA and a 401(k) aren’t the only investment opportunities to consider. Do a bit of homework and decide which investments are right for you. There are more options for IRA investments with a self-directed IRA, for example.
It may also help to speak with a financial adviser about the possibilities of exchange-traded funds, which have low fees, or index mutual funds. Don’t go blindly into trendy investments, such as cryptocurrency, or mutual funds that may perform poorly if they aren’t managed actively and properly.
A trusted financial adviser should steer a client in the right direction says Gary Begnaud, which usually means a responsible mix of stocks, bonds and cash, including long- and short-term, small-cap, mid-cap, large-cap, and international.
Ignoring Debt
Gary Begnaud explains that chances are if one is human and of a certain age, there will be debt whether it’s from credit card use, student loans, or more. Debt is easy to set aside when one is young. It also easily accumulates and can have a big impact on retirement savings.
Instead, establish an emergency savings fund that can cover any type of unexpected expense to avoid debt as much as possible. Also, come up with a plan within a budget to pay down debt, whether that’s targeting the most expensive debt first and going from there or if it’s more manageable to start with the smaller debt totals.
Either way, take care of it sooner rather than later.
Filing for Social Security Too Early
An easy rule to follow: the longer the wait is for filing for social security, the higher the benefit will be. While people can first choose to file when they’re 62, Gary Begnaud explains that full retirement begins around ages 66 or 67 — and filing can take place all the way up to 70 years old.
At 70, maximum benefits are achieved. If one can wait until then, do it.
Thinking You Will Continue to Work
Gary Begnaud of New Jersey notes that while many people decide to work at least part-time during retirement, it’s unwise to assume that any type of income stream is a given when reaching retirement age. While it’s certainly possible to land a post-retirement job, one cannot predict the impact of a potential health issue or family needs, as well as the state of the economy decades down the line.
A goal can certainly be to work during retirement, but it’s better to plan as though that won’t be an option.
Begnaud Wealth Management Group
of Janney Montgomery Scott, LLC
701 East Gate Drive, Suite 210
Mount Laurel, New Jersey 08054
[email protected]
(Member: NYSE, FINRA, SPIC)
