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5 ways to derail a retirement plan

By Jennie L. Phipps · Bankrate.com
Thursday, May 23, 2013
Posted: 10 am ET

Nobody ever said that retirement planning was going to be easy. Americans worry about retirement planning. According to a recent Gallup poll, 61 percent are very or moderately worried about not having enough money for retirement, and 58 percent are worried about not being able to pay costs associated with a serious medical issue.

If you're among the worried, here are the five circumstances most likely to derail your retirement in order of least serious to most damaging.

Taking a 401(k) loan. As long as your employer allows it, you can lend yourself up to $50,000 from your 401(k). Sometimes, taking one of these loans makes sense. But often it doesn't because people don't pay them back and the loans turn into a distribution, complete with income taxes owed plus a 10 percent penalty for those younger than 59 1/2.

Taking the money out of your 401(k) when you change employers. Cashing out your retirement fund -- even when it is a small amount -- is almost never a good idea.

Starting retirement savings too late. If you start saving when you are in your 20s, you'll have the power of compound interest on your side. If you wait until you're 50 and starting to panic, you'll have a hard time catching up.

Not saving enough. Some 57 percent of workers told the Employee Benefit Research Institute, or EBRI, that they have less than $25,000 in total savings, and 28 percent have less than $1,000. That won't go very far.

Failure to save at all. One-third of workers told EBRI that they aren't saving anything at all for retirement -- even though they admit to knowing better.

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4 Comments
Miles
May 25, 2013 at 10:52 am

After sitting in front of CNBC's daytime stockmarket programming for 3 years, suspicions abound.1) news reaches markets 2 to 3 days earlier by "entitlement leaks"to connectors,2) talking heads talk their books to find guppies to take their trades higher then dump them before anyone else finds out what they did,"Fast Money".3)Computer trading in algo's influence your buys or sells in stock orders, watch the spikes on your orders.Buy 100 shares and they dribble in at 20 to 30 at a time.Technology will continue to transform, and leave all but well connected out in left field. Retirement planning is dead in the water for so called portfolios. Tangibles may be the only thing left, like diamonds, gold coins, land? Annunities, find out where insurance company will make their money before you buy one. Consult an independent CPA to help understand annunity tables. The days of "Louis Roukaiser's Friday nite programing is dead and gone.

Steve C.
May 24, 2013 at 12:47 pm

One sure way to derail your retirement plan is to think that whoever's in-charge of it will get you out in the event of a crash, they'll just sit there and watch your money go down like a lead balloon and then charge you fees on top of all those losses! Money managers watched over 95% of their clients accounts take the full roller-coaster ride during the last crash, what do you think they'll do for you in the next one? Any clues?

Brian Canes
May 23, 2013 at 8:26 pm

What is your source for the statement "Nobody ever said that retirement planning was going to be easy."?
Well, retirement "planning" is somewhat easy. There, I said it. What is difficult is having the correct sensible plan, executing and sticking to the plan, knowing when and how to adjust the plan, and having a sustainable sufficient outcome.