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Whether you’ve been working hard for 30 years or are just three months into your first job, it’s always wise to plan ahead for retirement. After all, one day you will close the chapter on your career and start the next adventure. But what you get out of tomorrow depends on what you put into it today — and how you handle any bumps along the way.

So, while you’re keeping one eye on that retirement prize, make sure to keep the other on the lookout for pitfalls, like:

1. Short-Sighted Savings

This is where proper planning plays a big part. Savings generally take time to grow, so you may wish to consider saving and investing early to take advantage of compound interest and long-term stock gains if the U.S. stock markets continue their historical upward trend.  Also be sure to consider multiple avenues for your savings dollar, including 401ks, IRAs and Personal Savings.

So how much money do you need to save for retirement? Well, the answer is different for everyone. Individual risk tolerance goes a long way in determining how — and how much — to save. Use a retirement calculator to help estimate your future financial needs and then talk to a financial professional to develop a savings strategy tailored for you and your specific circumstances.

2. Career Interruptions

In today’s economy, you can never be sure of your job stability — or of your ability to quickly find a new job if you get laid off. That’s why many believe it’s critical to maintain an emergency fund to cover 6-12 months of living expenses like rent or mortgage and groceries.

If you withdraw money from your retirement savings, especially a qualified retirement plan, you may incur tax penalties on the withdrawals (depending on your circumstances) while also cutting into the account’s value over time.

3. Unforeseen Illness or Injury

According to the Social Security Administration, about one in four 20 year-olds working today will become disabled before they retire.  It’s a startling statistic with serious consequences. If you get sick or hurt and have to go on long-term disability (generally after six months of short-term disability), your employer may have the right to terminate your position — and with it, your ability to continue contributing to your 401(k). This can potentially have a considerable impact on your retirement savings.

Many people who become too sick or hurt to work are forced to tap into their retirement savings to meet the expenses of everyday life. A disability income insurance policy not only helps replace a portion of your income when a disability occurs (assuming certain conditions are met), but it can also be designed to help you continue saving for retirement.

4. Debt

From credit cards to home loans to paying off your children’s college education, debt has the potential to derail your retirement plans. Debt, when not properly managed, may lead to low credit scores, a depletion of your retirement savings, or even bankruptcy. Unmanaged debt may also make achieving your foundation of retirement planning — the accumulation of assets — more difficult and potentially more expensive. The key is to pay down debt while properly balancing it with your other financial priorities.

5. Life Events

You can save early and save often for retirement, but something may happen that puts that savings at risk. Maybe your daughter’s college scholarship falls through. Or your aging father suddenly needs full-time care. Or your home value unexpectedly declines when you are ready to sell. At that point, you can either toss up your hands and say “That’s life!”, or you can be thankful you prepared for this obstacle.

Taking the steps ahead of time to prepare for potential and real obstacles can help you enjoy life’s next adventure — retirement.

Provided by Shane J. Duhe, a financial representative with Duhe Financial Strategies, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual)

©2020 Massachusetts Mutual Life Insurance Co, Springfield, MA 01111-0001      CRN202304-282332