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At 60, Diane Fuchs knows a little bit about investing for retirement. The Washington, D.C.-based employee benefits attorney has a 401(k) plan, a mix of IRA accounts—and a good sense of discipline about protecting her retirement funds.
Yet six months ago, worried about a tumbling stock market, Fuchs anxiously considered selling off all the equities in her accounts and putting the money into safer securities. She figured she'd safeguard her savings from plummeting share prices, then get back in once the dust settled.
Fuchs is not alone. Planning for retirement is discouraging these days. Even people with stable jobs face swelling gas prices, utility bills, health insurance premiums, and other expenses that make extra cash for retirement elusive. With distractions like a turbulent stock market and a shaky economy, it's easy to take your eye off the ball and forget your ultimate financial goals. Here is a look at five retirement planning mistakes you absolutely need to avoid.
Mistake No. 1: The biggest blunder is cutting back on contributions to a 401(k) plan, since most companies offer matching funds—the ultimate cash freebie. In general, 401(k) plans are set up so that the employer adds 50 cents to each dollar a worker contributes, typically up to 6 percent of the worker's salary. That's an immediate 50 percent return on investment. Yet nearly one quarter of American workers don't contribute to their 401(k), according to the Profit Sharing/401k Council of America, a nonprofit |
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