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Common Retirement Planning Mistakes ... term investment prospect, not a short-term money-making strategy. Taking a loan. Borrowing against your retirement account can be tempting when

Jul 06, 2020




  • A ccording to the 2010 Wells Fargo Retirement Study, 65% of Americans think they are not saving enough

    for retirement. You can close that gap. Here are four common mistakes to avoid when retirement planning.

    TrustTalk Current news concerning your retirement plan Summer 2011

    Not maximizing your match.

    You need to contribute at least 6% of your salary to take full advantage of the company match, and you can contribute up to $16,500 a year ($22,000 a year if you’re 50 or older), per IRS rules. Halliburton offers a dollar-for-dollar company match on the first 4% that you contribute and $0.50 on the next 2% that you contribute, for a total of a 5% company match. Not maximizing the company match is leaving money on the table — money that will come in handy when you retire.

    Common Retirement Planning Mistakes

  • Failing to diversify.

    When it comes to planning for your retirement, make sure your investments are in different baskets to protect your nest egg. A diversified portfolio helps manage risk by combining a variety of investments; if one investment loses value, gains in others can offset your losses. Without diversification — taking into account your age, retirement goals and risk tolerance — you are subjecting yourself to higher risk. A properly diversified portfolio will help you minimize your risk while maximizing your return.

    Trying to predict the market.

    Without a crystal ball, it’s difficult to accurately predict the market and know when you should buy and sell. The one-year holding periods for the S&P 500 have very inconsistent consistent patterns of highs and

    Trust Talk is published quarterly by the Halliburton Trust Investments Department. It is designed to provide members of the Halliburton Savings Plan and Halliburton Retirement and Savings Plan (referred to collectively as the retirement plan) with conventional wisdom on saving and investing. The information included in Trust Talk is not intended as financial advice. You may want to consult a financial advisor before making any investment decisions.

    Suggestions or comments about Trust Talk can be sent to Sharon Parkes or Maria Bacaling, Trust Investments Department, 10200 Bellaire Blvd., Houston, Texas 77072.

    lows. So if you buy and sell according to market cycles and indicators, your timing may be off and you could fall short. In fact, most investment professionals don’t endorse market timing strategies. Saving for retirement is a long- term investment prospect, not a short-term money-making strategy.

    Taking a loan.

    Borrowing against your retirement account can be tempting when making a big purchase such as a home, but 401(k) loans are often a costly mistake. Yes, you pay the money you borrow back to yourself rather than to a bank. But experts say that most 401(k) participants who take out loans will probably stop contributing to their retirement savings while repaying the loan. And while you may pay yourself back the interest, the money you take out doesn’t have the chance to grow and compound, so you are losing out on the long-term earnings potential. Finally, if you leave your job before repaying the loan, you have to pay back the loan in full or pay the early withdrawal penalty and taxes.

    Terms Every Investor Should Know

    D iD

    Y o

    u K

    n o

    w ?

    Diversification — A portfolio strategy designed to reduce exposure to risk by combining a variety of investment classes, such as stocks and bonds, which are unlikely to all move in the same direction at the same time. The goal is to reduce the risk in your portfolio.

    Tax-Deferred Account — An account, such as an IRA or the Halliburton retirement plan, which can earn dividends, interest and capital gains without being subject to annual income tax. Only when withdrawals are taken from the account, typically during retirement, are taxes due.

    Tax-Free Contribution — Tax-free contributions are made before federal, state and local (if applicable) taxes are taken out. Your contributions to the Halliburton retirement plan are tax-free.

    Catch-Up Contribution — Beginning in the calendar year in which you reach age 50, you can make what the IRS calls “catch-up contributions” of up to $5,500 to plans like the Halliburton retirement plan. This is in addition to the regular pre- tax limit of $16,500 for 2011. This means in 2011 you can contribute up to 50% of your income to the limit of $22,000 pre-tax dollars.


  • E veryone has questions about retirement, although the questions will likely change depending on your age. Your questions about retirement savings in your 20s are going to be quite different than the ones you ask in your 50s. Let’s take a look at some

    common questions for each age group, and their answers.

    20s Why should I start saving now? It seems too early. It’s never too early to save. By starting now you’re doing yourself a huge favor. Assuming

    an 8% return, an investor who starts saving at 25 and invests $5,000 a year for 40 years ends up with $1,398,905. Compare that to an investor who starts at age 35 and invests $5,000 a year for 30 years and ends up with $611,729. Thanks to the power of compounding, the sooner you start, the more you’ll have.

    Why should I invest in the Halliburton retirement plan? When you invest, Halliburton adds money to your account through the company match. Also, the retirement plan is the easiest way to start saving for your retirement. Your tax-free contributions are made through convenient payroll deductions, so saving is automatic. In addition, your earnings grow tax-free too, boosting your savings potential.

    Frequently Asked Questions about Retirement Planning

    I’m just starting out and don’t have money to save. What can I do? Save what you can in the Halliburton retirement plan, even if it’s only a small amount initially. Look at your spending habits and find ways to save. Increase your contribution amount whenever you can, such as when you get a raise or pay off your car. If you contribute more, Halliburton does too, through the company match. Go to to make sure you are maximizing the match.

    What is the Halliburton match?

    The company matches dollar for dollar on the first 4% you contribute and $0.50 on the next 2% you contribute, for a total of a 5% company match. Your contributions are made on pre-tax basis. You need to contribute at least 6% of your income to receive the full match.

    In addition, you automatically receive a 4% basic contribution, even if you choose not to invest anything else. However, you only receive the match if you contribute.


  • 30s I didn’t save anything in my 20s. What should I do? Start today. Take full advantage of the Halliburton match and then contribute anything additional

    you can. Per IRS rules, you can contribute up to $16,500 a year pre-tax in the Halliburton retirement plan. Go to to get started.

    How do I know which Halliburton fund to invest in? Which fund or funds you invest in depends on your risk tolerance, time horizon and retirement goals. You might consider one of the Halliburton Premixed Portfolios. The Premixed Portfolios are lifestyle funds that base their asset allocation on targeted risk and return profiles: aggressive, moderate, conservative and stable value. You select the Premixed Portfolio that best fits your investment objectives and tolerance for risk. Generally, a more aggressive approach is advised for younger investors. As you get closer to retirement, you can switch to a more conservative fund.

    I want to buy a house, but don’t have a down payment. Can I take a loan from my Halliburton retirement plan account? You can take a loan or withdrawal from the retirement plan. Specific rules and guidelines apply to loans and withdrawals which are available in the Summary Plan Description. Think carefully though, as this has a long-term impact on your retirement savings and could delay your retirement start- date. In most cases, you are financially better off waiting to buy a house until you’ve saved the down payment. Keep your retirement savings for retirement.

    40s How can I save for both retirement and my kids’ education? It is wonderful gift to pay for your children’s higher education costs,

    but not if it puts your own financial future at risk. No matter what, you should continue to contribute to the Halliburton retirement plan. Your financial advisor can help you set up an education fund for your child, while still making sure you continue to reach your retirement goals.

    If I live until I’m 80, how can I make sure I have enough money in retirement? Save as much as you can now in the Halliburton retirement plan, and in your personal savings accounts and IRAs. Also, retiring later can help ensure you have enough money to last through your retirement. Finally, the way you invest your money is important before and even during retirement, since you’ll need to keep your money invested even as you’re drawing income. Use the Fidelity retirement calculators to develop an action plan.

    Is it too late to start if I’m just starting out? Better late than never! It’s critical to start saving as much as you can afford. You can invest from 1% to 50% of your income in the Halliburton retirement plan, up to the IRS limit. Go to to increase your contributions to the retirement plan.

    What is the IRS Contri

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