Retirement & IRAs

4 Retirement Mistakes to Avoid

Most American workers worry they won't have enough money for retirement. Fortunately, your State Farm® agent is here today to help you start preparing for tomorrow. We can help you make decisions that may strengthen your financial situation and preserve your money for as long as possible.

While you're thinking about what to do with your savings now, make sure you avoid these common retirement mistakes:

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1. Saving Very Little or Not Saving at All

It's important to start early and save often. Many investment advisors recommend putting 10 percent of your pre-tax income toward retirement. If you can't afford to save that much, start somewhere, even at 5 percent. You can set a goal to build up to 10 percent by saving a little more each year. Regular contributions are what's important over time.

2. Giving Up On a Retirement Savings Plan

The thought of preparing for retirement can be overwhelming and cause many people to delay savings goals, but it's better to start late than never at all. With a little help from your State Farm agent, you can determine what your goals are for the future and devise a plan that fits your situation. Taking a disciplined approach to retirement savings, and following your plan, can help you gain greater confidence in your ability to reach your goals.

3. Cashing Out When You Change Jobs

If you cash out from an employer-sponsored retirement plan before age 59 1/2, you face two potential tax hazards. First, you risk moving to a higher tax bracket in the year you cash out, thereby paying a higher marginal tax rate. Second, you may have to pay a 10 percent penalty tax. We highly recommend you consult with your tax adviser before cashing out. You may find you're better off leaving the money in your former employer's plan or rolling it over into either your current employer's plan or an IRA. If you roll it over, your money can work for you on a tax-deferred basis until you reach retirement.

4. Carrying Too Much Debt Into Retirement

Debt—whether from a mortgage, car or credit card—can put a dent in your retirement plans. When you're thinking about your future, you should set goals for savings and cash flow as well as debt elimination.

How Can State Farm Help?

We're here today to help you take charge for tomorrow. Talk to your State Farm agent about your insurance and financial needs and let us help you reach your retirement goals. Meanwhile, to see how much it will take to have the kind of retirement you'd like, visit and bookmark the State Farm retirement calculator


Neither State Farm nor its agents provide tax, legal or investment advice. Customers should consult their own legal, tax, or investment advisors regarding their specific circumstances.

Prior to rolling over assets from an employer-sponsored retirement plan into an IRA, it's important that customers understand their options and do a full comparison on the differences in the guarantees and protections offered by each respective type of account as well as the differences in liquidity/loans, types of investments, fees, and any potential penalties.