Actively Saving Avoiding Shortfalls

As you build your retirement savings, take care to avoid behaviors that may jeopardize your ability to reach your savings goal. Keeping your target amount in mind, continue to actively save and avoid early distributions. Even with the best of intentions, you may face a retirement savings shortfall. Know what to do if you encounter one.



Behavior to Avoid

Neglecting to set a goal: Creating a savings strategy is next to impossible if you don't know what the goal you're trying to reach is. According to the Employee Benefit Research Institute, 25 percent of workers who have calculated how much they need to save for retirement feel very confident they'll reach their goals, versus only 13 percent who haven't done a calculation.*

The Fix

If you haven't figured out how much you need to save for retirement, do it now using Navy Federal's Retirement Nest Egg Calculator.


Behavior to Avoid

Not prioritizing retirement: Too many people put other financial priorities first and fail to contribute enough to their retirement accounts.

The Fix

Save as much as you can now and strive to increase your contributions as your financial situation improves. If your employer offers a matching contribution, contribute at least the minimum required to receive the full match. Those 50 or older should consider taking advantage of additional catch-up contributions.


Behavior to Avoid

Practicing portfolio paralysis: Having a long-term perspective is a good strategy, especially if you have many years until retirement. However, that doesn't mean you should set your contributions and initial investment asset allocations and forget about them.

The Fix

Review your accounts and investments each year with a financial advisor and adjust them as necessary to make sure they're still in line with your goals, timeline and risk tolerance.


Behavior to Avoid

Borrowing from your future: Taking a loan from your retirement savings causes you to lose out on future earnings on the money you borrow. It could also cause your money to be taxed twice as any repayments will be made with after-tax funds, which will then be taxed again when you take distributions. If you take out a loan and then leave your job, you must pay it back entirely or it will be considered a distribution, subject to both taxes and penalties.

The Fix

Establish an emergency savings fund and explore all other options—such as home equity, personal, education or auto loans—before borrowing from your retirement savings.


Behavior to Avoid

Tapping funds early: Early retirement may seem tempting, but if you start withdrawing money from your retirement plan prior to age 59½ (or age 55, if separating from your job), you'll be subject to income tax and a 10 percent penalty. Penalties aside, spending down your retirement savings too soon could leave you short of money later on.

The Fix

If you leave your job, consider rolling over retirement plan balances to an Individual Retirement Account (IRA) or into your new employer's retirement plan. Once you retire, determine an appropriate withdrawal rate.


Navy Federal's Retirement Shortfall Calculator can help you plan a strategy that enables you to reach your retirement goal.

*2014 Retirement Confidence Survey, Employee Benefit Research Institute and Mathew Greenwald & Associates.

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Want to increase your retirement savings?

Boost your IRA contributions or add a certificate to the mix.

Not sure where to start? Contact a financial advisor at 1-877-221-8108.


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