{"id":6216,"date":"2013-04-19T13:29:43","date_gmt":"2013-04-19T20:29:43","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=6216"},"modified":"2016-12-21T07:30:39","modified_gmt":"2016-12-21T15:30:39","slug":"easy-ways-to-wreck-your-retirement-plan","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/easy-ways-to-wreck-your-retirement-plan\/","title":{"rendered":"3 Ways to Wreck Your Retirement Plan"},"content":{"rendered":"

Anyone who\u00a0grew up in the 1960s<\/a>\u00a0remembers how driving a car used to be. Rough roads, no power steering, shifting with a stick. It could be fun, but you had to be on the ball. And you actually had to know how to drive.<\/p>\n

It was exhausting, too. Getting around town would wear you out. Long drives were an endless rumble of tarmac and wind noise. No romance there, just effort and stress.<\/p>\n

\"wreck<\/a><\/p>\n

Consider driving now: Cars are sleek, efficient and quiet. You don’t hear a thing outside of your tightly sealed,\u00a0comfort-controlled\u00a0bubble. Roads are generally smooth and curves are banked. In cities, lights are better timed and pavement is marked for safety. The cars we drive today are, essentially, luxury golf carts.<\/p>\n

Even a terrible driver today can have a pretty good experience on the road most of the time. In fact, it’s a little boring. So we distract ourselves with business calls and radio talk shows, some of us with video screens. On long drives, we wind up lulled into a state of drowsy unawareness while cruising at 70 mph or more.<\/p>\n

In a way, that’s what has become of our approach to saving and retirement. Yes, huge numbers of us don’t save enough in the first place. But for those that do, the problem turns into one of highway hypnosis. We barely pay attention.<\/p>\n

See if you recognize these poorly understood “road to retirement” dangers:<\/p>\n

1. Allocation, what allocation?<\/strong>\u00a0Your 401(k) is all set up at work. Great, that’s a huge step. A pamphlet from the plan manager suggests that you diversify. So you buy a collection of mutual funds that match an age range. Then 15 years go by. Have you looked at it since? Probably not.<\/p>\n

Here’s the fix:<\/strong>\u00a0Adjusting your allocation as you get closer to retirement is important stuff. Generally, you want to\u00a0dial down risk as the years pass<\/a>\u00a0but not turn to cash or fixed income too soon. It’s not good to obsess about this, of course, but reviewing every five years or so is a good policy.<\/p>\n

2. Who put all this cash in my account?<\/strong>\u00a0Retirement savers sometimes don’t realize that dividends paid on stocks they own and bond interest payments show up in their retirement accounts as cash. Too often, it just sits there earning nothing. Likewise, some asset classes zoom up in value, only to deflate later.<\/p>\n

Here’s the fix:<\/strong>\u00a0Companies are moving to push their employees into\u00a0target-date\u00a0funds by default. Like pension funds of the past, these vehicles\u00a0rebalance\u00a0your money automatically. Some\u00a0target-date\u00a0vehicles are unusually expensive, however. Look for the ones that use\u00a0index funds<\/a>\u00a0and charge\u00a0very low management fees<\/a>, or\u00a0rebalance\u00a0your investments yourself<\/a>\u00a0when necessary, including reinvested cash.<\/p>\n

3. I’m on track…I think…<\/strong>\u00a0The scariest part of investing is the urge to try to go faster to reach your goal. It’s like racing to get to a wedding on time by speeding through traffic and taking chances. You’ll get there, sure. Or get run off the road and into a tree.<\/p>\n

Here’s the fix:<\/strong>\u00a0Save enough, early enough to make a difference. Six percent is great and 10% is much, much better. If you’re halfway down the road to retirement, however, now is no time to stomp on the gas by taking wild bets in the markets. Increase your savings rate, cut expenses and\u00a0find a balance of safety and growth<\/a>\u00a0that will ensure that you arrive alive.<\/p>\n","protected":false},"excerpt":{"rendered":"

Anyone who\u00a0grew up in the 1960s\u00a0remembers how driving a car used to be. Rough roads, no power steering, shifting with a stick. It could be fun, but you had to … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":6233,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[4],"tags":[],"yoast_head":"\nEasy Ways to Wreck Your Retirement Plan | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"Wreck your retirement? 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