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To celebrate his 30th birthday, Kevin drove across the state to visit his grandmother. He wanted to take the fastest route but then he saw a road sign that read, “This way to the world’s largest ball of twine.” He veered off to investigate. Then he took another detour to check out a hubcap museum. He had to call Nana and tell her he was running a little late. Nana just sighed and said, “Oh dear, that’s Kevin. Always getting distracted from his goals.”

Being spontaneous on a trip to Nana’s can be a fun adventure. But taking detours from your retirement savings plan might cost you tens of thousands of dollars in potential account growth.

Here are five avoidable retirement planning detours that could make it harder to reach your destination.

  1. Not saving at all: The days of relying on company pensions, Social Security and Medicare to provide security throughout your retirement years are long gone. You may have to rely on your personal savings for a large portion of your retirement income. That new demand on your money requires saving regularly in retirement plans throughout your working years.
  2. Not saving enough: The general consensus among financial experts is that the average American worker should aim to save at least 10% of their salary in their retirement plans. Saving upwards of 15% or more would be even better.

  1. Leaving matching funds on the table: The general consensus among financial experts is that the average American worker should aim to save at least 10% of their salary in their retirement plans. Saving upwards of 15% or more would be even better.
  2. Borrowing against your retirement funds: By borrowing from your retirement account you may miss any potential growth in the stock or bond markets. If you cannot make contributions because you are making loan payments, your account balance will not grow as fast. It is best to leave your retirement savings invested for the long term and find other sources to fund short-term needs.

  1. Investing too conservatively: Historically, stocks have provided higher returns than bonds over time periods of 20 years or more. If you are more than 20 years away from retirement and you have a large percentage of your retirement savings invested in bonds and other conservative investments, you may not earn a high enough return to reach your retirement income goals.

To keep from getting lost on your journey to retirement, follow these basic rules of the road:

  • Start saving early in your career and do not stop
  • Save as much as you can (at least enough to get the full company match, if available)
  • Avoid taking loans or doing anything that would prevent you from contributing to your plan
  • Make more educated investment choices that match your goals, time horizon and tolerance for risk.

If you need help, call 844-253-8692 and ask to speak to a Voya Financial Advisor.

* Employee Benefit Research Institute; Issue Brief, August 3, 2017

Financial Advisors are Investment Advisor Representatives and Registered Representatives of and offer securities and investment advisory services through Voya Financial Advisors, Inc., Member SIPC.

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