6 Retirement Mistakes to Avoid in Your 40s and 50s

In your 40s or 50s? Here are the six mistakes to avoid now for a better retirement later.

Retirement is an important milestone in any business owner’s life. If you’re in your 40s and 50s, retirement may still seem a ways off - especially if you’re busy running a business. But financial decisions you make now will determine when you can retire and how much money you’ll have. Whether you have yet to start saving, already have a sizeable nest egg, or maybe you’re somewhere in between, there are things to always keep in mind. Let’s look at six retirement savings mistakes to avoid now, so you can plan for a comfortable retirement later.

1. Not having a succession plan
   1. A succession plan is essential for ensuring the smooth transition of the business to new ownership. Whether the business is being passed down to a new generation or being sold. Clear direction is needed. Without one, the business may struggle to continue without an owner’s leadership.
2. Putting Off Saving for Retirement
   1. It is easy to ignore retirement planning. Between the demands of your business and taking care of your family, you have many competing financial interests in your life. However, if you wait until you are ready to focus on retirement, you could lose out on years of compound interest you could be accumulating.
3. Using Retirement Funds to Pay for an Extra Expense
   1. You may be tempted to borrow money from your 401(k) retirement account for a down payment on a house, buy an extra piece of equipment for your business, or take out a little extra for cushion. Paying this back to yourself could prove difficult and ultimately, stunt the growth of your retirement savings, hindering your long-term goals for you, your family, and business.
4. Putting Your Kids’ College Education Ahead of Saving for Retirement
   1. It might be tempting to dip into your retirement savings to send your kids to college. But making this move could put you years behind in your retirement savings. Student loan programs could be a better option that will not compromise your retirement nest egg.
5. Losing Track of Your Accounts
   1. Ideally, retirement saving is a long-term strategy you begin when you are young. Over time you might get married, change jobs, have children, and adjust your retirement savings plan. It is easy to lose track of your accounts, which is the first step in losing money. Consolidate any old 401(k) or other retirement accounts as much as possible, weighing the benefits of the different types of plans that are available. If appropriate, move money in nonretirement accounts into a retirement plan.
6. Choosing Unwise Investments
   1. It's important to choose your investments wisely, whether this is for personal or business use. The right investments can help you and your business grow and succeed, to ensure your business is long-lasting for generations to come. Be sure to look at factors like industry trends, the track record of the type of investment, and the overall financial health. Always keep in mind “risk vs reward”, while keeping a clear understanding of your business goals and how the right investments can potentially fit in to your generational strategy.

Don’t worry if you didn’t start saving for retirement until now. Since Social Security was introduced, the average retirement age has gone up with every generation. People are living longer, working longer, and even enjoying second careers. Planning to retire in your late 60s or even early 70s gives you more time to build your retirement nest egg, plan for your business succession, and ensure you have a restful retirement when you chose for that time to come.

Saving for retirement is a long-term financial strategy. The best retirement saving decisions result in slow and steady financial growth. It is a good idea to check in with a financial advisor, or commercial banker periodically to initiate and review your retirement savings and investment plan.

To learn more about resources to help you plan for retirement, we are here to help you.