Avoid These 5 Retirement Planning Mistakes

1: Not Calculating the Money You'll Need

According to one survey, just 41 percent of workers reported that they and/or their spouse have tried to calculate how much money they will need to live comfortably in retirement.1 Determining how much you need for your retirement is an important step toward planning for a financially secure future.

Our retirement calculators, such as our Retirement Readiness Calculator, can give you a clearer picture of where you stand. They're easy to use and can help you determine how much you may need to save to meet your needs and income goals in retirement.

2: Contributing Too Little to Your Plan

Here's why contributing as much as you can as soon as you can is critical. Assume you have accumulated $25,000 in retirement savings, you're 50 years old and earn $50,000 a year, and your employer offers a match of 50% of your contributions up to 6% of your annual pay. By contributing at least 6% of your salary, you can get the full match to help provide a substantial boost to your retirement assets by age 65. But contributing more has the potential to provide a sizable boost to your total savings.

chart


This hypothetical example is for illustrative purposes only and does not represent any actual investment performance, price or yield. This illustration assumes a beginning balance of $25,000, includes an employer match of 50% of contributions up to 6% of annual pay, no increase in earnings and an annual rate of return of 6%. Investment returns are not guaranteed, and your actual return may vary significantly from that shown.

3: Procrastinating

We'll use Lisa and Mike as a hypothetical example to show why it's important not to wait when it comes to saving. When Lisa was 25 years old, she started contributing $1,000 a year into a tax-deferred traditional IRA and then stopped 10 years later. However, her friend Mike didn't start until age 35, and then contributed $1,000 a year for 30 years until age 65.

As the chart shows, by age 65, Lisa's savings based on those 10 years alone grew to $80,246, nearly as much as Mike's $83,801, despite contributing for 20 fewer years. Even better, assuming she continued contributing the same amount at the same frequency until age 65, her overall savings would almost be double that of Mike's!

Bottom line: the sooner you begin making contributions, and continue to do so until retirement, the more the power of tax-deferred compounding can help you meet your long-term financial goals.

chart


This hypothetical example is for illustrative purposes only and does not represent any actual investment performance, price or yield. This illustration assumes a beginning balance of $0, contributions are made annually and an annual rate of return of 6%. Investment returns are not guaranteed, and your actual return may vary significantly from that shown.

4: Cashing Out of Your Retirement Plan

The Bureau of Labor Statistics reported that the median number of years that workers age 25 and older spent with their employers as of January 2016 was 5.1 years.2

While cashing out of your retirement plan account when you change employers might be tempting, it can prove costly, as you may be cheating yourself out of years of tax-deferred compounding of interest and investment earnings.

Of course, it's your money, and your retirement may be years away. To find out more about the options that may be available to you, including "rolling over" your account into a Mutual of America Rollover IRA, a variable annuity contract, speak with your local Mutual of America Regional Office today.

5: Not Getting Help

Mutual of America's Participant Account Representatives (PARs) are available to meet with you on a one-on-one basis. They can address your questions about your retirement plan, discuss the value of saving for your future, and help you assess your retirement readiness and plan for a financially secure retirement. To speak to your PAR by phone or meet in person, contact your local Mutual of America Regional Office.

1

"2017 Retirement Confidence Survey," Employee Benefit Research Institute/Greenwald & Associates, March 2017.

2

"Employee Tenure in 2016," U.S. Department of Labor, Bureau of Labor Statistics.


Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the variable annuity contract and the underlying investment funds. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses. Please read the contract prospectus or brochure and underlying fund prospectuses and summary prospectuses carefully before investing. The contract prospectus or brochure and underlying fund prospectuses and summary prospectuses can be obtained by mail or by calling 1-800-468-3785.

Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment funds you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should carefully consider a variable annuity contract's other features before making a decision.




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