The Most Common IRA Mistakes

April 3, 2020

An IRA is one of the best and most common ways to save up money for retirement. Sadly, figuring out how to manage your IRA is not exactly simple. There are so many mistakes you can make with your IRA that can threaten the security it provides. Luckily RITA can help you along the way! There are a few mistakes that can make a lasting impact on your IRA success, but with the right support and guidance, you can avoid them all. Here are a few of the most common IRA mistakes and how to avoid them.

1. Withdrawing Too Early

The most common mistake when it comes to any retirement plan is removing funds too soon. Remember your IRA is not just your typical savings account. It can cost you significantly more to pull money out of any IRA. If you are under the age of 59 1/2, and you withdraw earnings from your Roth IRA, you will have to pay taxes and a 10% penalty. If you have a traditional IRA, this applies to any money you withdraw from your account. Yes, there are some exceptions, but overall, it usually is not worth it.

2. Contributing Too Much or Too Little

The key to a successful IRA is finding a good balance when it comes to contributions. The best way to achieve this balance is through a professional. Investing too much or too little can have costly consequences. So, having the right person by your side can help clear up all of the confusion. One of our trained professionals, that you can find through RITA, will assess all of the factors and help you find an amount that is good for your your present day and in the future.

3. Forgetting About Beneficiaries

Another common IRA mistake is not naming or not updating your beneficiaries. Even if you are starting your retirement planning early, you should always name beneficiaries from the beginning. You can make changes to them at any time, but if something happens and there are no beneficiaries named, your family can face enduring delays and taxes. Also, be sure to update your beneficiaries upon any significant changes in your life. For example, if you get a divorce, your ex-spouse will have access to your IRA unless you remove the name. This can be easily avoided by being avidly involved with your IRA and keeping in contact with your chosen retirement partner. 

4. Being Inconsistent

Many people make the mistake of fluctuating when it comes to their IRA. For example, when you start retirement planning early, you may think it is not necessary to invest very much to start. Or when times get a little tight, you may choose to skip your investment for a while. These can turn into very costly IRA mistakes. Remember, your IRA compounds over time. So, the more you invest now, the more you will have later. Working with your RITA partner is the best way to keep your plan consistent and on a string path.

Retirement is essential to everyone and utterly complicated, which leaves a lot of room for mistakes. It is easy to get swept away by advice from friends and family and the many contradicting methods across the web. The best way to avoid all of these IRA mistakes is by partnering with someone with experience and patients that can help you every single step of the way. That what we aim to do for you here at RITA. Just by reading this article, you have taken the first step to secure your future. Now you can visit the rest of our website to continue learning and contact us to see how we can help you avoid these costly mistakes!