IRA and 401(k) Mistakes
By Candace Bahr

Avoid these pitfalls when investing for retirement.

As a financial planner for over 20 years, I’ve seen a lot of money mistakes in my time. But the worst seem to come with retirement plans. Something about them just makes people do silly things I guess.

One of the biggest mistakes is simply investing too conservatively. If you have a long investment horizon, your biggest fear should be that you aren’t investing your money aggressively enough, not that you’ll lose your money. Trust in the long-term. Unless you are a few short years from retirement, avoid investing your money in Guaranteed Investment Contracts and money market funds that barely beat inflation.

Another common mistake is not changing the beneficiary on your IRAs. If you can’t remember who the beneficiary is on your IRA, you should check. Is it your old boyfriend? Your mother? You could disappoint your spouse and children terribly if anything happened to you.

Finally, never, never invest in anything designed to save you taxes inside of a tax-deferred vehicle like an IRA. There’s no point in having variable annuities or tax-free bonds inside of a tax-deferred account.

When it comes to retirement planning, every investor should take advantage of the tax breaks IRA’s and 401(k)’s offer. Just be sure you are taking full advantage.