5 Surefire Ways to Ruin Your Retirement

These misleading pieces of financial advice could hurt your retirement plan.

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Some pieces of retirement advice are misleading and confusing. Following retirement advice that you don’t fully understand or that doesn’t have data to back it up can hurt your retirement savings. Here are five ways you can wreck your retirement if you decide to follow such advice.

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Withdraw more money early in your retirement and reduce spending later. It’s easy to overspend shortly after you retire on travel, hobbies, and other activities you didn’t have time for while working. But if you withdraw too much of your savings early in retirement you may have to reduce your withdrawal rate later. The stock market could rally for multiple years as soon as you call it quits, but the opposite could also be true. If you don't catch a good break, then you will have to reduce your standard of living later on in retirement, which is very hard to do.

Plan to work full time longer. Some financial advisers tell their clients they can spend more while they are working if they plan to delay their retirement beyond traditional retirement age. Delaying retirement by a few years will certainly improve your retirement finances. But unless you are your own boss, the decision isn't always yours. What if you get laid off and can't find work that compensates you at your current salary? You don’t always get to choose your retirement date. Planning to work indefinitely could lead to disastrous results if you lose your job earlier than expected.

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Save under the mattress. People always talk about pulling all their savings out of the stock market when the economy is struggling. Investing is volatile. But being ultra-conservative is never going to get you to where you need to be. If you've got decades to go with your professional career, then investing for the long term in a diversified way like buying index funds is betting on the continued growth of the economy over decades, which is always a good decision for your money.

Be a stock super star. Some people invest their entire retirement account balance in individual stocks. Other people choose exotic investments that they don’t fully understand. This may be exciting or make you feel like a sophisticated investor, but most people don't need the stress or risk. There are perfectly good investment alternatives that don't require you to be a full time stock picker. Think about it this way: Even if you can beat the market by doing the necessary research on a consistent basis, can't you just buy index funds and spend the time making more money elsewhere?

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Set it and forget it. Most financial advisers try to get their clients to meet regularly and that is great. But what's more important is for the professionals to teach their clients how to maintain their retirement plans themselves so they will be OK with or without outside help. We all know about the potential perils of not having a retirement plan. But having a plan that isn't kept up to date is even worse because you are acting on the belief that you are on the right track when you could possibly be going in the wrong direction.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.