Folks make mistakes and from time to time we may learn from them presuming it is not too late. If you find a rather serious planning error after you have picked up your last check, your retirement years are probably going to suffer. Fortunately , forewarned is forearmed, meaning learning about common retirement mistakes will aid in avoiding them in times to come.
It is a mistake to defer retirement planning:
In the opinion of the Employee Benefits Research Institute, 60% of today's employees have not determined how much they will have to save for their retirement desires which is the first step in retirement planning. It's a rather difficult process, and the help of a financial planner can be invaluable when making a step by step plan that will take you to your goal. Take time to review asset assignment, monitor investment outcomes, and make changes as needed. Though it may not be convenient, failure to plan will lead on to missed opportunities, lost tax benefits, and less than golden retirement years.
It is a mistake to believe your savings are safe:
During the past, finance advisers often told their senior clients to put 60% of their savings in bonds and 40% in stocks, with a switch to 80% bonds upon retiring. Their logic was to preserve pension savings by reducing investment risk. With longer life expectancies, many view this information as invalid. Inflation, growing faster than the modest returns of supposed safe investments, will ultimately eat away at your savings and cut back your buying power.
Today advisors advocate keeping the capability for growth in your portfolio up to and through retirement. A mixture of products which will make you a genuine rate of return after inflation and taxes should boost your purchasing power over a period or at the very least keep it steady while still reducing risk. Balance should be sought between investment security and making sure you have plenty of savings throughout your retirement.
It's a mistake to be excessively generous:
If you're among the lucky few that assume that they have plenty of retirement savings, you could be tempted to share your wealth with your family before you retire. While your kids will definitely think highly of a paid trip through college or your help buying their first house, giving away assets now can put you in a difficult spot later on. Nobody knows with certainty what the future holds. You'll live for longer than expected. You'll need pricey long-term medical care. If you've been too liberal with your savings, you might find yourself without. Always take the long term view whenever using your savings and be mindful of the unforeseeable future.
It is a mistake to put down your position needs:
Will you really spend less than you do now during your retirement years? In the past, a rule of thumb amongst planners was to expect post-retirement spending to be about 80 % of your present ones. But this is not always so. While you may not be commuting to the office each day, or spending money on work lunches, travel and leisure activities can cost even more. And, certain expenses like life insurance, health care premiums, and co-payments are probably going to go up. Also, Medicare does not cover things like dental, vision, hearing or skilled nursing costs.
As you contemplate what you need for retirement, your future is at risk from your happiness to your economic security. Avoiding mistakes will help you create a brighter future. Spend the time to discuss your present position with a fee based certified financial planner making sure they earn no commissions on their advice or selling you financial vehicles. Also be sure to put some of your savings to work using information and education like what's offered bySummerland Associates to help attain your goals. Making these tiny changes as soon as possible will offer huge benefits in your retirement years.
It is a mistake to defer retirement planning:
In the opinion of the Employee Benefits Research Institute, 60% of today's employees have not determined how much they will have to save for their retirement desires which is the first step in retirement planning. It's a rather difficult process, and the help of a financial planner can be invaluable when making a step by step plan that will take you to your goal. Take time to review asset assignment, monitor investment outcomes, and make changes as needed. Though it may not be convenient, failure to plan will lead on to missed opportunities, lost tax benefits, and less than golden retirement years.
It is a mistake to believe your savings are safe:
During the past, finance advisers often told their senior clients to put 60% of their savings in bonds and 40% in stocks, with a switch to 80% bonds upon retiring. Their logic was to preserve pension savings by reducing investment risk. With longer life expectancies, many view this information as invalid. Inflation, growing faster than the modest returns of supposed safe investments, will ultimately eat away at your savings and cut back your buying power.
Today advisors advocate keeping the capability for growth in your portfolio up to and through retirement. A mixture of products which will make you a genuine rate of return after inflation and taxes should boost your purchasing power over a period or at the very least keep it steady while still reducing risk. Balance should be sought between investment security and making sure you have plenty of savings throughout your retirement.
It's a mistake to be excessively generous:
If you're among the lucky few that assume that they have plenty of retirement savings, you could be tempted to share your wealth with your family before you retire. While your kids will definitely think highly of a paid trip through college or your help buying their first house, giving away assets now can put you in a difficult spot later on. Nobody knows with certainty what the future holds. You'll live for longer than expected. You'll need pricey long-term medical care. If you've been too liberal with your savings, you might find yourself without. Always take the long term view whenever using your savings and be mindful of the unforeseeable future.
It is a mistake to put down your position needs:
Will you really spend less than you do now during your retirement years? In the past, a rule of thumb amongst planners was to expect post-retirement spending to be about 80 % of your present ones. But this is not always so. While you may not be commuting to the office each day, or spending money on work lunches, travel and leisure activities can cost even more. And, certain expenses like life insurance, health care premiums, and co-payments are probably going to go up. Also, Medicare does not cover things like dental, vision, hearing or skilled nursing costs.
As you contemplate what you need for retirement, your future is at risk from your happiness to your economic security. Avoiding mistakes will help you create a brighter future. Spend the time to discuss your present position with a fee based certified financial planner making sure they earn no commissions on their advice or selling you financial vehicles. Also be sure to put some of your savings to work using information and education like what's offered bySummerland Associates to help attain your goals. Making these tiny changes as soon as possible will offer huge benefits in your retirement years.
About the Author:
John A. Larsen, the Managing Director of Summerland Associates, LLC, has worked in financial services for 20+ years starting in banking. John has held Series 7, 63, and insurance licenses working with high net worth clients to craft better portfolios. John has spent the last 10+ years refining advanced investment ideas into a series of applied methods that drive the Summerland Alerts. More articles can be found on Summerland Associates website or via Wealth Building Ideas, published for iPads.
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