11 Retirement Planning Mistakes That Can Have Long-term Consequences

Dreaming of the day you retire? Planning for retirement is an important step for your future that requires a lot of thought and even strategy. But are you planning the right way?

You might need to address some flaws in your plans if you want to enjoy a stress-free retirement with enough to live the life you desire.

Review your retirement strategy and confirm you aren't making these mistakes that could lead to setbacks.

If you're decades away from retirement, you may think you don't need to start saving money just yet.

However, saving early gives your funds more time to earn interest and rise with the stock market. Depending on your investment account, you can reinvest that money to expand your portfolio.

A little saving now can make you more when you retire than if you try to catch up later on.

An emergency fund is a great thing to have now in case of unexpected costs, like health issues or home repairs. That emergency fund will also help you in retirement.

It's important to keep that fund flush with cash, no matter your age. You don't want to be scrambling for emergency cash on a fixed retirement income and nothing more.

It's one thing to make risky investments when you're younger and still working. After all, there's time to compensate for losses later in your career.

But remember to revisit your portfolio regularly and rebalance it to take on less risk as you approach retirement. You don't want to have to work longer because you didn't prepare for market dips.

Setting a retirement date can create a great goal to work toward as you save.

But that retirement date may have to change, so you need to be ready to adjust your plan. Be prepared to adjust for drops in the market, job loss, or other major problems that could change your retirement date.

You may think you're doing fine with your retirement plan because you created an estimated monthly budget for retirement years ago.

But when was the last time you revised that budget? Set a specific time to revisit your estimated budget regularly and adjust it as needed. 

Things like healthcare, kids moving out or back in, or family issues may change your budget plans.

Getting a raise is a great accomplishment that should be celebrated. However, it should also be a time for you to revisit your retirement investment strategies.

Your higher salary allows you to save more each month for your retirement investments or a retirement savings account.

Your 401(k) might be filled with stocks from your company, or it may skew toward technology stocks that you anticipate will help you earn money for a post-work life.

But it's important to diversify your portfolio and not be invested in one sector. Spreading your investments across multiple sectors could help you avoid investing too heavily in an ill-fated industry.

Sure, you may be investing cash in retirement funds, but what about your company-provided 401(k)? Companies sometimes match their employees' retirement contributions up to a certain percentage.

Take full advantage of your company's matching program. Tightening your budget in other places can allow you to maximize the amount your company contributes.

It's tough to watch your portfolio go into the red and your retirement savings plummet, but it can be a big mistake to get spooked and pull your cash out.

You don't want to pull your cash before you can make your losses back on an eventual upswing, especially if you don't plan to retire for several years.

Instead, consider bumping up your contributions to your 401(k) or another retirement portfolio to earn more money when the market goes back up.

Unfortunately, taxes will follow you even when you're retired, so you must include those costs in your estimated retirement budget.

It's important to consider where your money is invested and what the tax implications are when you go about accessing that cash.

You'll also need to consider your location, as some states charge extra taxes on retirement accounts or investment funds.

You may be investing in different funds or saving it in different accounts, but have you considered how your Social Security benefits will factor in?

It's important to remember that the longer you wait to take your Social Security benefits (up to age 70), the more you can collect each month.

The Social Security Administration's calculator can help you find the sweet spot between how much you want to collect each month and how long you must wait before collecting it so you won't have to supplement your Social Security income.

If you take steps now to ensure that you're responsibly saving for retirement, you're more likely to have enough cash ready when it's time to retire.

The best way to meet your retirement goals is to prepare now. As you look forward to the coming year, it's important to have a plan and make sure you're making steps toward where you want to be in the future.

In the meantime, remember that there are things you can do now to avoid wasting money and save more for retirement.