Everybody wants to retire comfortably, but there are a number of common scenarios which can do serious damage to a personal retirement fund. Here are the top five pitfalls that retirement investors should keep at the top of their watch list.
1. Pension Plan Restructuring
One of the recent trends amongst bigger companies is a move towards pension restructuring. This includes early buyouts, structural changes, and tighter contribution rules. The end result in almost every case is that the worker has less money in his/her retirement fund. Currently Verizon is facing legal troubles for trying to transfer some of its pension responsibility.
2. The State and City Can’t Make Good
Public service jobs have always had some of the most generous benefits packages, but generosity may be misplaced if the government can’t handle the bills. Here’s a current example from the ever beleaguered California pension system.
3. Carnivorous Retirement Plan Fees
You may have a nice chunk of money in your retirement fund right now, but how much of it is going to be nibbled away by ever increasing fee structures? The industry has been up in arms lately over new disclosure rules, but the truth is that few people read the rules anyway. Here’s Liz Weston on the dangers that your 401(k) may be facing.
4. Retiring with Debt
Many people have ample retirement savings, but they also have ample debt. Credit cards, mortgages, and other debts have a way of seemingly always being there. Here a U.S. News report on the dangers of debt in retirement.
5. Company Failure
If you are relying on your company sponsored pension to fund your retirement, then you have to hope your company is still around when you retire. If your company is not as profitable as it once was, or if closes down altogether, then your pension will also be affected. Here’s what happening to the pensions of workers at snack food giant Hostess.