If you’re not setting aside enough — or any — of your paycheck each month, your retirement dream could become a nightmare. Even if you plan on working during retirement, you might need more money to cover medical care, travel costs and living expenses. Check out these hidden obstacles that could be impeding your retirement goals, and get tips for growing your nest egg.
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1. Overspending During Your Working Years
No matter how much you make during your working years, keep an eye on your spending — especially those big-purchase decisions, such as a new car or home, said Robert Steen, a certified financial planner and retirement advice director at USAA. You might be able to afford an added car payment or a larger house, but if you consider that extra money could be going into a retirement plan that’s earning interest, you’ll find you’re missing out on opportunities to save more.
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2. Miscalculating Retirement Savings Goals
Do you really know how much you need to save for retirement? “A general rule of thumb is to have about 12 times your final salary saved by the time you retire,” said Steen. This amount assumes you will retire at 65. But considering you could be saddled with additional medical expenses in retirement — and that you’ll need to accommodate for any financial shortfalls — you might want to save more. There are strategies to follow to hit your savings goals.