Complete Financial Services, Inc

Saving for retirement can be intimidating and confusing. This leads many people to avoid thinking about it altogether and just hiding their heads in the sand. However, the ostrich approach won't make it any easier to reach retirement with a comfortable savings. In fact, avoidance is only one threat to your future financial security. Check out the following threats to your retirement account.

1. Not Starting Early Enough

The most helpful advice about retirement saving is to get started as soon as you can. The greatest asset in wealth-building is time. The sooner you begin, the more compound interest you will be able to earn. Even if you can only put a small amount into savings at first, it's important to get started. You can (and probably should) increase your contributions as you move along in your career.

2. Fees

Most retirement accounts have fees and unfortunately, you usually can't avoid them. However, you can make sure they are not draining your retirement account and leaving you with minimal savings. It's a good idea to research retirement account options before you start using one. Then it's important to check your statements regularly to see how the fees are affecting your savings. If your employer offers you retirement options, it's important to make sure you are picking a 401(k) that will help meet your needs.

3. Withdrawing Too Much

If you do get started early, it can be difficult to be patient and leave the money to grow. Drawing from your retirement savings can be tempting. It's important to start a separate fund for other financial goals like buying a home so you don't have to use retirement money for anything but retirement.

4. Major Unexpected Expenses

Emergencies or unplanned events come up all the time throughout life. These can be events like divorce, illness, death of a relative, loss of job or pregnancy. Many of these can be expensive and put a strain on your finances. It's a good idea to have a separate emergency fund that you can use when an unexpected expense arises.

5. Inflation

The price of things — from housing to food — usually increases over time. This is why when you are determining how much money you need in retirement, it's important to account for inflation. Rising prices can pose a major threat to your savings if you aren't prepared.

6. Not Saving Enough

In addition to factoring in inflation, there are other reasons it can be a good idea to overestimate how much you need to save for your golden years. There are many unknown factors when it comes to retirement — from how much health care will cost in the future to whether you will be able to continue working as long as you would like.

7. Outliving Your Money

The good news is that people are living longer. The bad news is that if you plan to retire at the same age, you will likely have to save more money to cover the cost of those extra years. Not preparing for a long enough retirement can leave you vulnerable at the end of your life.

At the same time, taxpayers need to develop tax-efficient strategies for making distributions from their retirement accounts to ensure they will not outlive their nest egg. Many financial advisers offer guidance to clients on how to grow their investments but miss on creating retirement distributions plans that will minimize the impact of taxation. The importance of timing is critical. The sooner you develop these plans, the better.

Here are 3 ways to lower taxes on your retirement savings: Retirees can minimize the taxes they pay on their nest egg by putting their savings in a Roth 401(k). Another strategy for retirement savers to reduce the tax burden on their savings is by claiming the Retirement Savings Contributions Credit for up to 50% of their retirement contributions (only available to taxpayers with an AGI less than $18,000 or $36,000 for joint filers and phases out as income rises). Clients also need to determine the tax rate they face before and after they retire when making contributions, so they can develop a tax-efficient way of building their nest egg.

Contact us today to prepare for your retirement tax-efficiently!

This article originally appeared on Credit.com.