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It’s never too early to start planning for your retirement, but you may not consider some important factors as you get started. It’s necessary to learn about the basics of growing wealth for retirement to ensure you don’t make costly mistakes. This guide can help you circumvent common errors.

Inaccurately Assessing Your Retirement Budget
While it is difficult to predict the future, you should try to create a retirement budget that’s as accurate as possible. This is necessary because you’ll be living on a fixed income, but you’ll also face unexpected expenses. In addition to your routine bills, you’ll have to account for the costs associated with your care. This may include the co-pay on doctor’s visits, prescription medications, and hospital care. Later in your retirement, you may need to hire a home care aide, which will cut into your budget.

Failing to Create an Income Plan
You will also need to develop an income plan in writing to ensure you know when to withdraw funds to cover your expenses. Your income plan should also identify which sources you’ll use for your income. By the time you retire, you’ll likely be earning income from multiple sources, such as Social Security benefits, a 401k account, an IRA, and multiple investment accounts. Some of these accounts require you to withdraw a specific amount on a predetermined payout schedule, so it will be important to pay close attention to those accounts.

Failing to Diversify Investment Funds
Younger investors are often compelled to grow wealth as quickly as possible, causing them to concentrate all their savings on high-risk/high rewards investments. This strategy will often result in more losses that will cancel out any growth you actually make. It’s more advisable to separate your savings and assign just one portion of your funds to high-risk investments, such as stocks. The remaining sum should be further divided up among CDs, annuities, and mutual funds. This will help you grow wealth steadily as you also pursue an aggressive wealth growing strategy.

It can also help you to consult a financial advisor about your retirement plans. An experienced advisor can help you meet both short-term and long-term goals in building your wealth. Benefiting from an advisor’s expertise will help you feel confident that you’ll be able to retire when you do reach retirement age fully.