Haven’t Planned for Retirement? Here Are 3 Pitfalls to Avoid

1. Thinking there’s no time to save. At age
 55, there’s still typically more than ten years to start aggressively saving for retirement. And it’s an ideal time to begin, says Nathan Gendelman, president and director of investments for the Family Firm Inc. in Bethesda and Stacy Bakri, one of the firm’s senior financial advisors. “People in this age bracket oftentimes see their costs drop as children become independent and medical costs have not yet spiked,” Gendelman says. Regardless, it’s imperative to start changing behavior now, says Brian Oettinger, partner and certified financial planner for Vintage Financial Planners in Rockville. “You cannot make up poor spending habits with stellar investment returns, just like you can’t make up terrible eating habits by simply going to the gym,” he says.

It’s a good idea to establish a retirement and spending plan, even if it’s not within the ideal timeframe, says Daniel Lash, partner at VLP Financial Advisors in Vienna. “I find this reassuring to clients to find out when they can retire, and what they can do with spending and savings to help them reach that goal.”

2. Being too timid—or too risky—with investments. “Taking extraordinary risk is just that, extraordinarily risky, and better left to those with 30 or 40 years remaining until retirement,” Gendelman says. Still, he and others warn that trying to be too “secure” with investments, such as annuities, is another pitfall.

“People are living longer than ever and your annuity benefit will almost always remain static,” warns Jennifer E. Myers, president of SageVest Wealth Management in McLean. “The effect of inflation is like the action of the tide on a pebble on the beach; over time, inflation can significantly erode the value.”

3. Banking on working well into retirement. While this approach might be a good option for some, it’s risky to postpone retirement as your solution, Myers says. That’s because employment can never be guaranteed, and neither can health—especially as people age. “In fact, studies show that fewer than half of the individuals who hope to work longer in retirement are eventually able to do so,” she says. Oettinger adds that knowing when to retire and start taking Social Security for maximum benefits remains a key strategy.