If you’re in your 20s or even your 30s, you probably feel like your life is just getting started — who has time to think about retiring decades from now? Although it might seem far off in the distant future, what you do right now will determine what kind of life you’ll live then — and then will be here sooner than you think.

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Most 60-year-olds would probably love to go back and talk some financial sense into their younger selves. They’ll never get that opportunity, but you have the opportunity to set your future self up for success by planning for retirement now. That success will depend partially on what you do, but also on what you don’t do and the mistakes you avoid. If you’re a Gen Zer or young millennial who’s thinking about retirement planning, you’re already on the right track.

Now all you have to do is avoid the following common mistakes at all costs. Wasting Time

Most people make more money as they get older and advance in their careers. The tradeoff is that they lose a little bit more of their most valuable asset with each passing day — time, which gives compound interest its magic.

A $100 investment that earns 5% interest will be worth $105 after one year. After two years, it won’t be worth $110 — it will be worth $110.25.

It’s true that 25 cents won’t buy much in 2022, but thanks to compound interest, that extra quarter will eventually be worth a whole lot more, but only if it has enough time to keep compounding.

Don’t make the mistake of thinking you’ll be able to catch up with larger contributions later in life. The longer you wait, the more futile saving becomes. A 25-year-old who saves $1,000 a year for just 10 years will have more money at age 65 than a 35-year-old who saves $1,000 a year for 30 years. Going In Blind

You don’t have to earn a degree in finance to grow your money, but an investment in learning should precede an investment in dollars. Once you move beyond the shelter of your savings account, even the safest investments come with risk, so it pays to know what you’re getting into.

Learn the basics about the different kinds of investments, like stocks, bonds, ETFs and mutual funds — each of which comes with different fees, time commitments and risk levels — as well as about different retirement accounts, like IRAs, Roth IRAs and 401(k) plans.

Find sources and professionals you trust to give you some guidance. Not Maximizing Your Employer’s 401(k) Match

If you’re in your 20s, you’re probably broke and if you’re in your 30s, you’re probably busy. In both cases, it’s natural to want to keep every dollar that you earn.

But if you have an employer-sponsored 401(k), you have to find a way to get by with fewer dollars if it means squeezing every penny out of your company match, which can often be up to 6% of your paycheck.

If you earn $50,000 a year and your employer matches 5%, you could save $2,500 annually but you’d be getting $5,000. You’re simply not going to find a better deal than doubling your money every year. Every dollar under that 5% threshold that you keep for the here and now is a free dollar that you’re turning down. Succumbing to the Influence of Influencers

Your brokerage account is just a click away from your TikTok account, but you should put some space between the two.

According to Business Insider, Gen Zers and young millennials are more likely to turn to online influencers for investment advice than trained professionals — #MoneyTok videos tallied nearly 13 billion views by the start of this summer.

That’s not necessarily a bad thing.

There are plenty of financial influencers who are qualified, competent and well-intentioned, but they can get lost in the clutter of big names hawking cryptocurrencies they know nothing about.
According to Business Insider, you should look for influencers who previously worked as successful financial professionals but left their field to expand their influence online. The good ones typically advocate for long-term investing strategies and interact with followers on their channels. Overinvesting in Trends ETFs were a new and unfamiliar trend when they first emerged in the early 1990s. By the end of the decade, they were a proven and trusted staple […]

source 7 Retirement Planning Mistakes People Make in Their 20s and 30s

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