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Five big mistakes in retirement planning

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According to a recent survey, only 13 percent of respondents told the Employee Benefit Research Institute they’re very confident they’ll be able to afford a comfortable retirement.

Whether your retirement plans include spending more time on hobbies, traveling or even launching a new business, there are steps you can take now to plan for your future. Here’s how you can avoid common pitfalls and reach your retirement goals.

“The first step in retirement planning is to meet with a financial adviser at an early age,” said Andrew Kahn of Concannon, Miller & Co., Bethlehem. “People procrastinate, say they’re too busy to plan, and they don’t want to think about retirement because it’s a point in their lives that seems so far away.

“But most investments take time to see financial return, so as soon as people become employed, they need to think about how much money they will need at retirement and implement a savings and investment plan to get them there.”

According to Joseph Brita, senior partner at Quantum Financial Management in Allentown, a good retirement portfolio addresses when you plan to retire, what your plans are and how much money you will need to accomplish those goals.

“It really doesn’t take much time to sit down with an adviser, set up a game plan and identify clear financial goals,” Brita said. “But some people spend more time planning their vacations than their retirement.”

“Credit cards can be a demon if they’re not under control,” said Michael Fischer, president and CEO, Client 1st Financial in Fogelsville. “Living beyond your means is poor financial strategy at any time of your life, but it’s especially harmful later in life.

“If you have high credit card debt at retirement, you won’t have the income to pay it down. It’s going to eat away at your nest egg.”

According to Fischer, most people are caught unaware and underestimate the rate of inflation.

“A good portfolio will take into account the high cost of living at the client’s time of retirement,” he said. “Most people will live 15 or 20 years after they retire, so they have to take in to account their living expenses that far ahead.”

It’s also a good idea to think about your spending habits at retirement.

“You won’t have an income, yet you’ll have a lot of spare time on your hands,” Fischer said. “Will you need money to finally take that 10-day cruise or indulge in a hobby full-time?”

“The world, and your life, constantly changes,” Brita said. “Once you have a retirement portfolio in place, it’s important to periodically touch base with your adviser to make sure you’re on the right path.”

Brita advised meeting with your adviser at least once a year. It’s a good idea to meet more often if your family’s financial picture changes, such as increased household income, lost job, increased credit card debt or if your retirement plans change.

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