Only one-in-four Americans (27%) feel very confident that they will have enough money to live comfortably when they retire, according to the 2020 Retirement Confidence Survey Summary Report.⁠11 While the number is up slightly from the 2018 survey (23%), it speaks to a sense of uncertainty among those approaching retirement age.

While there is no single action that can boost the collective confidence of retirees, there are several key investment mistakes that, if avoided, can help you maximize retirement savings and provide confidence to those who are entering their Golden Years. Even if you aren’t nearing retirement, it likely is on your mind. Although we tend to think in the short-term, certainly you have wondered if you are even on track to retire when you want to.

Working with real estate professionals across the country, I can tell you that all real estate agents worry about being on track. With unpredictable income and at the mercy of the housing market, how can you be confident about your future retirement??

The following are some common pitfalls to avoid to help ensure that you can retire when you CHOOSE TO, not when your money circumstances dictate when you can retire.

Pitfall #1: Failing to Maximize Your Contribution

If you can afford to do so, contributing the maximum amount to your employer-sponsored retirement plan or SEP IRA will increase the chances that you’ll reach your investment goal. The earlier you start, the better; it will allow your investments, and any potential earnings to grow on a tax-deferred basis. I’m amazed at how many real estate agents I come across that don’t fully maximize their retirement plans, even when they can! Think about it this way, your money can either go to the IRS, or it can go to you for a future date. Choose to pay yourself!

Pitfall #2: Failing to Develop a Concrete Plan

Establishing clear goals that incorporate a time element (number of years until retirement) is necessary to create a relevant investment plan. Without such a plan, it’s difficult to understand whether your savings will provide you with the living standard to which you’ve grown accustomed and for each year of your retirement. Think about your ideal retirement. What does that look like? Its vitally important to map out what you will be doing during retirement! Once you know, then you can out a cost figure to that and start planning.

Remember, fail to plan….plan to fail.

Pitfall #3: Short-Term Investment Mindset

The stock market fluctuates; that’s a fact. And in the short-term they face a relatively high risk of price volatility. But in the long-term stocks have historically delivered relatively stable earnings. So, selling off your holdings whenever the market takes a dip is a sure way to incur losses that impact your long-term goals. In periods where the real estate market or the stock market take a dip, those are perfect buying opportunities! My favorite Warren Buffett quote states, “Be fearful when others are greedy, and be greedy when others are fearful”.

Pitfall #4: The Quest for Perfection

Buying low and selling high is evergreen advice, but trying to time investment decisions on when the market will be at its lowest or highest is risky business, often leading to missed opportunities. As per #3 above, investing for the long-term can provide a more stable investment mindset. This is to say, you cannot time the market, so don’t try to wait for the next big drop because you’ll often be waiting for longer than advised. Think about the real estate market since 2020, all those waiting for a real estate correction have missed their moment. It’s no different in the stock market.

Pitfall #5: Eggs All in One Basket

 Some investors make the mistake of investing in just one fund or asset type, thereby subjecting it to high risk should the market impact their specific holding. Spreading your investment risk over a mix of assets can help manage potential loss during these sharp market swings. The key here is diversification to offset losses in a particular asset category. No, I’m not saying real estate is bad. I’m a huge advocate for real estate, and makes up a large portion of my own household portfolio. But, I am saying to make sure you can be nimble when opportunity arises, and by being diversified, you can do just that.

With these pitfalls in mind, you are well-positioned to avoid the common mistakes of other investors and maximize opportunities for your retirement plan.

If you don’t have a plan for retirement, but would like to know if you are on track, schedule some time to talk! I’m happy to be of help!