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Getting your finances ready forretirementis extremely important.
Here, hes come up with five majorretirement blunders that could cost you millions.
Failing To Plan Ahead
Retirement planning is a vital step that seems obvious.
However, more and more people are pushing it to the side and spending their income on the present.
The Federal Reserve reported that a quarter of Americans dont have any money saved in a retirement account.
Many Americans may plan to lean on Social Security in retirement, but Kamel strongly advises against this.
The Social Security website states that in January 2024, theaverage Social Security benefitwas $1,907.
Dipping into your Roth IRA or 401(k) early means paying penalties and throwing money away.
In the same vein, withdrawing money early also means missing out on the magic of compound growth.
Retirement saving on easy mode requires investing.
This means that only 10% to 20% was money you deposited over the years.
Compound growth is when the money you invest begins to make more money.
The way it works is you gain interest on your initial investment.
The interest becomes part of your investment, making it a larger sum.
The next time around, you gain interest on your initial investment and the interest you accumulated next time.
This process of compound growth continues to snowball until you end up withmuch more moneythan you originally put in.
While it seems like an obvious investment strategy, it requires a lot of patience.
Kamel urges you to get started even if youre in your 40s or 50s and havent started saving yet.
While these accounts offer a tax advantage, they dont invest your money for you.
If youre able to choose, diversification is important.
Diversification means investing in various assets to protect yourself from risk.
However, spreading your investments across multiple assets can help protect your portfolio.
When you diversify, if one assets value drops, anothers may rise.
Kamel suggests investing in mutual funds.
The diversity of a mutual fund can withstand the ups and downs of the market.
Specifically, Kamel advises looking for growth stock mutual funds withlong track records.
Making Bad Investments
Investing is an essential part of saving for retirement.
However, you shouldnt just throw your money into anything.
These investments could lead to impressive gains but come with a lot of risk.
As a rule of thumb, Kamel advises avoiding high-risk investments when dealing with retirement savings.
Its better to do things the old-fashioned way.
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