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Retirement planning is about balancing time and investments with proper guidance.
Retirement planning is about balancing time and investments with proper guidance. Pexels

In a nutshell, golden retirement refers to a phase in life beyond your working years where you have a big enough egg nest with multiple sources of income from both investments and government benefits to cover your monthly expenses, unprecedented health costs, and leisure expenditures. It is when you retire knowing that you don't have to worry about your finances anymore. Sadly, the harsh reality is that most people do not reach that goal on time.

In fact, wealth management firm Personal Capital reported that the average 401(k) balance of those aged between 45-54 stands at $135,777 whereas those in the age range of 55-65 have an average 401(k) balance of $197,322. In contrast, the Employee Benefits Retirement Institute estimated that some couples need $325,000 for healthcare costs in their retirement.

Credit card debt, student loans, a lackadaisical attitude towards finances, and DIY investing are just some of the reasons why people's financial dreams get derailed. As we enter 2022, here are 4 financial pitfalls you should protect yourself from.

The Credit Card Debt Trap

At the moment, the average credit card debt is above $5,000 and most Americans have multiple cards with outstanding balances. You might have trouble saving and investing money in your early working years if you are a victim of high interest rates, steep late payment charges, and subsequent negative credit reporting. If you are deep in credit card debt and only make monthly minimum payments, it could take you decades to repay your loans. This would also mean that you will end up paying much more in interest payments compared to the original amount that you borrowed.

An AI-powered app Tally is built around the idea to protect people from exorbitant interest rates and high late payment fees, and you might want to look into it. Signing up is completely free of charge and once you opt for their low-interest line of revolving credit, Tally will transfer your credit card balances to your newly-approved line of credit. From there, all you have to do is make a single monthly payment to Tally at a lower interest rate and Tally will make your credit card payments to your lenders. This way, you can start saving on interest immediately and inch closer to a debt-free life.

Tally generally follows the Avalanche method of repayment. This basically means that they prioritize repaying high interest credit card debts with large outstanding balances. Over time, Tally claims that this could save you thousands of dollars in interest payments.

Furthermore, the app offers a Late Fees Protection program where they automatically pay on your behalf in case you miss a payment deadline. You simply have to pay Tally at a later date. To avail of the low-interest line of credit, you will need to have a FICO credit score of at least 660.

Even if you don't avail of the line of credit, though, you can put Tally's proprietary technology to use by linking your credit card on their app and creating a personalized loan repayment plan. This comes with a projected debt-free date and a suggested amount of payment for you to make every month. You can also rest easy as they are protected by military-grade 256-bit encryption.

Sign up with Tally today.

Being Ignorant of Your Credit Report

Your credit report details your loan application history, current and closed loan accounts, loan repayment history, late payment charges, and your credit score. Lenders like credit card issuers, personal loan companies, and mortgage providers tend to check your credit score to determine if you are eligible for loans. If you have a low credit score; chances are, you might get rejected as an employee or as a tenant.

Your credit score may also tank if you have a poor repayment history, high credit utilization, and too many rejected loan applications on your report. These entries could stay on your report for years and could take years to recover from, as well.

To work on your creditworthiness, it would help to check your credit profile on a regular basis. Doing so will also help you discover other problems like incorrect entries or cases of identity fraud. Identity fraud is when people with malicious content impersonate you by stealing your Social Security number, driver's license number, date of birth, and financial information to open loan accounts and file fake tax refunds in your name, among other cybercrimes.

A recent report from the Aite Group compiled responses from 8,653 American adults and found that cases of identity theft actually rose by 42 percent from $502.5 billion in 2019 to $712.4 billion in 2020. In addition, the Federal Trade Commission reported that identity theft complaints grew from 3.3 million in 2019 to 4.7 million in 2020.

By regularly checking your credit report from any of the major credit bureaus, you will be able to dispute any incorrect entry for a quick resolution. When it comes to financial fraud cases, make your report to the nearest police station as early as possible to contain the damage.

Credit monitoring services like Credit Karma can also help you view your credit report from Equifax and TransUnion for free every month. Additionally, their free credit and ID monitoring feature will alert you of any hard inquiries made by lenders, new credit accounts, changes to your credit limits, and changes to your personal details so you can dispute any inconsistencies and reach a solution as early as possible.

Sign up for Credit Karma today.

Not Investing in the Right Assets

Although cryptocurrencies, stocks, bonds, and real estate are all trending investment options worldwide, it has to be said that they are also prone to devaluation and market manipulation. During recessions in the 90s and during the pandemic in 2020, the only asset that actually surged was gold.

This precious metal has a limited supply but a global demand. Unlike fiat currencies, it is not controlled by the government and has been known to hedge inflation, stay immune to market manipulation, and offer a much-needed buffer to investment portfolios during market crashes.

As one of the most tradable assets, gold is accepted across the globe in exchange for almost any currency. This allows you to conduct business using this commodity with ease and privacy around the world. In addition, you are also free of archaic banking restrictions and failures. However, if you want to invest in gold, you have to make sure it is insured and that you have a safety deposit vault with state-of-the-art security in mind.

Where to Buy Gold Safely and Securely

A mobile app called Vaulted allows you to directly buy gold from the Royal Canadian Mint, which is owned by the Canadian federal government. You can buy 99.99 percent pure kilo gold bars manufactured and stored at the Royal Canadian Mint that is insured against theft and losses or mix ups. Holdings are audited every quarter by the Office of the Auditor General.

The Vaulted app is backed by the McAlvany Financial Group and is managed by an experienced team that has facilitated over $2.5 billion in precious metal transactions over decades. They'll also help you manage your portfolio, oversee your app experiences, and clear any doubts you may have.

To start, simply download the app and create an account with some basic information. Then, link your checking account through an encrypted channel before initiating a transfer of funds to your new Vaulted account. You may also manually add your checking account by sending your driver's license and a recent bank statement to their team.

Once the transfer is complete, you may buy gold by stating the amount you want to invest and placing the order with a simple click. During market hours, buying and selling gold on the Vaulted app is almost instantaneous. You also have the option to get your gold holdings shipped to your doorstep with a small shipping fee.

Fortify your investment portfolio with gold today.

Investing on Your Own Without Market Expertise

A National Financial Educators Council survey of 3,389 people revealed that the average person lost $1,389 in 2021 due to lack of financial knowledge with 10.7 percent of them losing more than $10,000.

DIY investing without understanding the technical jargon, market vibes, and experience could easily lead to financial ruin. Moreover, while hands-off investing using Robo-advisors may be a popular option for investors nowadays, these algorithm-based evolving tools still do not compare to the intuition and experience of an in-house financial advisor with a fiduciary duty.

Delegating your life savings to an app that automates investments based on data sets rather than intuition might not be worth it in the long run. After all, certified financial planners undergo 1,000 hours of coursework that teaches them to build relationships with their clients before delving into money matters.

Financial advisors who follow fiduciary standards are also required to legally and ethically work in the best interest of their clients. As such, they work hard to understand your financial fears, aspirations, spending patterns, earning capacity, taxes, and even health status before creating a detailed financial plan for you. Having said that, a good client-advisor relationship could also last for decades.

If you think finding the right advisor is a tedious task, a billion-dollar fintech firm called SmartAsset makes the process simpler by connecting vetted fiduciary advisors with clients in minutes. The New York-based firm also offers award-winning tools and services that encompass the entire spectrum of personal finance.

After answering a brief online quiz to help SmartAsset's concierge team narrow down their financial advisors based on your responses, they will connect you with up to three vetted financial advisors near you. You may then interview them to see who suits you best.

Team up with a financial advisor today.