Want a Stress-Free Retirement? Avoid These 3 Common Money Errors

It's common to save money for decades, hoping that you will have enough for retirement. Following good money habits will get you to the finish line sooner, but there are some mistakes you have to avoid along the way. If you steer clear of these common money errors while remaining financially disciplined, you'll set yourself up for a stress-free retirement.

1. Not contributing to retirement accounts

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Retirement accounts let you enjoy tax benefits while building your nest egg. Most employers offer 401(k) plans, and even if you have one of those accounts, you can also still contribute to an IRA.

The IRS sets limits on how much you can contribute to these accounts each year. It's always good to max out these accounts if you can, and if you are 50 or older, you can also make additional catch-up contributions.

Choosing between traditional and Roth retirement accounts comes down to your current tax rate and what you think your tax rate will be in retirement. However, you are missing out on a great opportunity to pad your retirement funds if you don't max out your retirement account contributions.

2. Overspending

Building a durable retirement portfolio requires saving money over many years and waiting for it to compound. Anyone can be financially disciplined for a single day, but it is harder to stick with good habits over multiple decades, especially when it comes to overspending.

Living beyond your means will reduce how much you can put into your retirement accounts. Excessive spending can also result in high credit card debt, and that comes with high interest payments.

You should only spend money on your credit card that you can pay back at the end of each month. It's also good to put a portion of every paycheck into your retirement portfolio. Many banks let you make automatic investments, so the money leaves your account before you can spend it.

3. Retiring too early

People work hard to retire on their terms, but if you retire too early, you might find yourself back in the workforce after a few years.

The FIRE movement has made more people consider early retirement. These people aggressively save money and hope that they can leave their jobs behind in their 40s and 50s.

The idea is that these people can live off the 4% withdrawal rule, but expenses tend to get higher over time, especially medical bills.

Leaving the workforce too early can result in an overstretched nest egg. You can mitigate this risk by working part-time and treating Social Security as a nice bonus, instead of as a critical piece of your retirement plans. That way, you'll have more than enough after factoring in your Social Security checks.

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