You Are Setting Yourself up for Retirement Disaster If You Do These 3 Things

"If you earn an average salary, you can expect Social Security to take the place of about 40% of it. And that doesn't even account for potential Social Security cuts. Most retirees can't get by on just 40% of their former income, though. Even if you're willing to lead a frugal lifestyle, you may end up needing more like 70% to 80% of your former paycheck to cover all of your costs."

"But if you invest your savings in conservative assets during your working years, your IRA or 401(k) may not generate very strong returns, leading to less money for you later on. It's appropriate to invest somewhat conservatively when retirement is right around the corner, or when you're already retired and are dipping into your savings consistently for income. But when retirement is many years away, it pays to go heavy on stocks for the strong returns they're known to produce."

Social Security typically replaces about 40% of an average salary and could face cuts, leaving many retirees with a significant income gap. Most retirees need roughly 70% to 80% of pre-retirement income to cover expenses. Retirement income should come from multiple sources such as savings withdrawals, investments, and part-time work. Investing retirement savings too conservatively during working years limits growth and reduces future withdrawal capacity. Conservative allocations are appropriate close to or during retirement, but earlier years warrant heavier stock exposure for stronger long-term returns and greater retirement flexibility.

Read at 24/7 Wall St.