Investing and planning for retirement can be stressful, overwhelming, and confusing. There are a lot of options to weigh and important decisions to make. According to a study from the Society of Actuaries, there is a ~60% chance that a 65-year-old couple will have one spouse reach age 90, which means your portfolio needs to be able to support you for as many as 20 to 30 years in retirement. The decisions you make (or do not make) today will have a significant impact on your financial future, which is why many people seek help from a financial advisor. Based on my 15 years of experience working with clients, here are some of the common mistakes I see related to investing and saving for retirement.

  • Not Investing Enough
    According to a survey by the Consumer Federation of America and the American Savings Education Council, only 49% of non-retired respondents thought they were saving enough for retirement. Although investing any amount is better than not investing at all (see next section), in order to ensure you will have enough savings to support yourself in retirement, it is important to understand how much you should be setting aside and how to prioritize doing so. A financial advisor can help you create a plan that works for your budget and goals and assist you in making adjustments when necessary.
  • Not Investing At All
    Some people fall into the trap of not investing at all because they think investing only a small amount of money is not going to make a difference. However, it is important to understand that time is the most important factor when it comes to saving for retirement. Investing early (and ideally, often) gives you the opportunity to take full advantage of the compound interest on your investment and also allows you to start creating wealth sooner. On the flip side, the longer you wait to begin investing, the more you will likely need to put away to achieve your financial goals for retirement.
  • Poor Tax Planning 
    Taxes can have a significant impact on building wealth in the long term, which is why it is important to minimize your tax liability. However, tax planning services, which are offered by some financial advisors (including me), are often among the most underutilized by clients. By evaluating your tax withholding, retirement accounts, charitable donations, access to health spending and flex spending accounts, and more, a financial professional can help you reduce your tax liability and potentially lower your tax bracket.
  • Withdrawing Retirement Savings Early
    When you are in a pinch financially, be it due to medical bills, unemployment, or another unexpected expense, it might be tempting to dip into your retirement funds. However, if you have not reached age 59½ yet, you will most likely have to pay a 10% penalty on the money you withdraw. You will also have to include those withdrawals as income on your tax return, which could move you into a higher tax bracket. Even if you are over age 59½, you must still pay income tax on withdrawals from traditional retirement accounts. Withdrawing money from your retirement funds early should always be a last resort, because when you do, you are basically starting from square one again, except with less time to reach your goals.
  • Trying to Time the Market
    With market timing, investors try to predict the best times to buy and sell stock. Unfortunately, this is one of the most common and worst investment mistakes I see people make. According to a Merrill Lynch study, when market timing is used, model portfolios could underperform by nearly half their value over a 30-year period. In truth, time (not timing) is one of your most important assets when it comes to investing. A financial advisor can help you create a plan, stay the course so that time can work on your behalf, and also help you recognize when adjustments need to be made.

Unfortunately, these are just a few of the common mistakes I see people make when it comes to investing and planning for retirement. However, the good news is that these mistakes can easily be avoided or resolved by working with a financial planner. A financial advisor can help assess your financial situation, opportunities, and goals, and guide you in making the decisions that are best for you.