Three Retirement Planning Mistakes to Avoid
Let’s talk about three common mistakes that can derail your retirement plans– and provide remedies that can help get you back on track.
1. Failing to Have an Income Plan in Writing:
Soon-to-be-retirees and retirees often say their No. 1 worry is outliving their money. Yet, many are just moving to and through retirement without a plan that tells them how much they will need from year to year, where to find the money that will replace their paycheck, or even, how long their money will last.
The remedy: A written income plan is like a compass: If you use it correctly, you’ll always know where you are and where you’re going. You may have to make some adjustments each year, as priorities and costs are bound to change as you move through retirement. But if you understand and stick with your income plan, it should help keep you on course.
2. Taking too much risk with your investments
Some people get so caught up in accumulating money they forget to protect what they have in or near retirement. Others mistakenly think they have a moderate or conservative portfolio when what they actually have is quite aggressive.
The remedy: We can work with you on a review of your investments, simulate how they would react to historic market crises (the 2000 and 2008 corrections, for example), and assess how vulnerable your current portfolio might be to future corrections. Once you have an idea of your true risk exposure, you can reconstruct your investment strategy to suit your needs and goals. This is huge when you’re counting on a stress-free and enjoyable retirement.
3. Giving away too much money (too soon)
For example, parents with grown children who still depend on them for everyday living expenses and others who are paying off their children’s student loans. Some parents loan their kids money or agree to co-sign on a car loan or mortgage. Parents may gift money to their children too soon and then come up short on what they need for themselves early or later in retirement. While we’d ideally like to be able to give everything we can to our kids, it’s not helping anyone at the end of the day. It doesn’t help the children, and it’s certainly not helping the parents.
The remedy: Always make sure you are OK first – whether you’re still saving for retirement or you’re already there. And if that makes you feel stingy, think of it this way: You’re giving your kids a different kind of gift – the gift of financial independence, for them and yourselves, too.
Our goal is to help guide you past these and other mistakes that can cause you to come up short in retirement. A good financial plan can help you overcome bad choices – and the sooner you can get back on track, the better you’ll feel about your financial future.
We’re here to help, no matter where you are on your financial journey.
Original Article: Kiplinger
Content in this material is for general information only is not intended to be a substitute for individualized financial advice. Please consult your legal advisor regarding your specific situation.