5 Retirement Killers to Avoid at All Costs
5 Retirement Killers
Working with hundreds of clients over 24 years, I have come to see some serious issues when it comes to retirement. Here is a list of the top “retirement killers” you want to avoid at all costs.
Not having a written income plan for life.
This is not the same as an investment plan. Most people I talk to tell me their number one worry is outliving their money yet many people are just winging it. Having a written plan is like a compass, if you use it correctly, you'll know exactly where you're going.
Using the wrong investment returns in your income plan.
There is a common belief that you may want to become more conservative as you go into retirement. In my opinion, this is a very slippery slope as there is something called inflation, and that can be a retirement killer. With inflation averaging around 2%, this means that every year the cost of living is going up and you need more than a 2% rate of return after tax to just keep up.
Taking too much risk with your portfolio.
As we see the markets going up and down, that can cause a lot of stress and cause some to lose sleep and make a bad decision. What you may want to do is stress test your portfolio and retirement income plan to see how would your portfolios react if we saw another market downturn, as we did back in 2000-02 or 2008-09. Base your plan on an investment strategy that suits your needs and your goals and allows you to enjoy your retirement.
Remember, it's not only what you make, it's what you keep.
Not enjoying your retirement.
When you retire, you transition from a savings mindset to an income mindset and some people become uncomfortable with spending the money that they've saved. This results in spending less than they could and can cause stress. Try to find a happy middle ground where you strategically spend more when the markets are up and spend less when the markets are down.
Ask us about exploring a bucketing strategy.
Giving too much money to your kids.
We all want to help our kids but we want to make sure you're in good financial shape first. With life expectancy rates going up the challenge we all face is that we don't know how much money you're going to need. I have seen a few situations over the years where someone has co-signed on a mortgage with their kids, gifted them some money, or helped them buy a condo and things have gone sideways. Let's talk about your options and make sure that we've got enough money for you before you start helping others.
Don't let these costly mistakes have you come up short in retirement. If you aren't 100% comfortable with the retirement income plan you have, and 100% confident in the advice you are getting, maybe it's time to get a second opinion.