All week, Get Rich Slowly will feature articles about retirement planning. This morning, I wrote about how important it is to pay yourself first. April and Adam will share their thoughts on the subject in the days ahead.
On today’s episode of The Personal Finance Hour, I joined my co-host Jim from Bargaineering to discuss saving for retirement. We spoke with Jeremy from Gen X Finance. Jeremy is a Chartered Retirement Planning Counselor and the author of About.com’s financial planning section.
Jeremy addressed some specific situations, but he also talked about general principles. He said the biggest mistake that people make is not saving enough. At the bare minimum, he recommends saving enough to get the company match for your 401(k) (if you have one).
Jeremy noted that there’s no golden rule for how much you should save. It depends on what you plan to do when you retire. If you plan to travel the world, you need to save more than if you’re going to stay home and work in your garden.
Another mistake people make is sticking to a default asset allocation. You have to make choices based on your own needs and your own risk tolerance. If you’re over-exposed to stocks as you near retirement, you run the risk of losing a large chunk of your nest egg in a bear market. But if you’re young and scared of the market, you run the risk of missing gains.
Jeremy says you shouldn’t be concerned about picking the right stocks. You should just get started. Save early. Save often. Once you have the habit, it’ll be easy.
(We also talked a bit about caring for aging parents, a topic that actually spurred more interest than I had expected. Many of us are beginning to face this issue.)
The Personal Finance Hour
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Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.