We’re all human, and we have certain behavior patterns that might be good for one part of our lives but not so good when circumstances change, including when we retire.
According to a recent article in The (Spartanburg NC) Herald-Journal, “Don’t make these retirement mistakes,” we benefit from routines that help us simplify our days, so we can focus on more challenging tasks.
However, there are times when routines can be a negative factor. That’s especially true when it comes to retirement. There are several perennial mistakes retirees make. Most are a continuation of doing things the way we have always done them—instead of making changes to the routine after retirement.
- Making Too Many Withdrawals. Spending too much money early on in retirement could result in your running out of cash later. Why? Individuals aren’t knowledgeable about health care costs, life expectancy, income needs and investment risk.
- Lack of a Plan. Retirees often don’t put together a financial plan that includes estate planning, a reasonable budget and other items for the short and long term.
- Failing to Accurately Judge for Inflation. If a nest egg isn’t earning enough to stay ahead of inflation and taxes, a retiree’s retirement lifestyle is likely to get troublesome well ahead of its time. It’s important to establish the appropriate blend of risk and return needed to maintain short-term purchasing power, in addition to working toward long-term goals.
- Staying on Autopilot. Some retirees fail to adjust the asset allocation of investment vehicles in their portfolio given their “stage of retirement” relative to life expectancy. They’ll have an inappropriate mix of investments for their lifestyle goals, timeframes and risk tolerance.
- Getting Scammed. One out of five Americans over 65 has been a victim of a financial scam. More than 7.3 million seniors are taken advantage of financially through inappropriate investments, high fees, or fraud—a cost of more than $2.6 billion a year. Many of the cases aren’t reported, so these numbers may be low!
- Relying on Bad Advice. Only a trusted professional should be relied upon for advice when it comes to your estate plan and your finances. Sales people have one goal in mind: to sell you a product. Your neighbors or your brother-in-law are not the people to take investment advice from. More than one retirement dream has been destroyed by a “sure thing” from a bad source. Talk with your estate planning attorney before making any major decisions.
Reference: Herald-Journal (January 9, 2018) “Don’t make these retirement mistakes”