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Top 10 Most Common Mistakes Retirees Make

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1. Relying on the advice of only one source for your investment strategy (even if it’s your own). We believe it is best to diversify your strategies using multiple viewpoints, experiences, and perspectives. No one manager or strategy will be right in all markets and all conditions. It’s like watching the meteorologist’s spaghetti models during a hurricane. They can’t all be right.
    

2. Not taking advantage of all your tax strategies. We find that most retirees have bought into the age old advice of maxing out their 401(k) and qualified plans. However, this leaves them with little to no tax diversification when they need it most. After all the deductions are behind them and their RMD’s are ahead of them.
    

3. Not having your estate planning in order. Keep in mind that most of these documents are there to protect you when you’re still living, not just after you pass away. You also don’t want to handcuff your loved ones when they are trying to help you in a time of need, or while trying to efficiently distribute your assets. Don’t be a statistic. Get your ducks in order while you have an opportunity to do it according to your wishes, not a judge or the IRS’s.
    

4. Spending too freely in relationship to income/savings. Most of our clients do not have this issue as they have been great savers, but I continuously run into high income earners that have little to show for it and often it is because they do not have a handle on what their actual spending is. They spend more than they should. A good rule of thumb is that you should not be withdrawing more than 4% of your retirement savings to live on. If you are still working, you should be saving a minimum of 15% of your annual gross income (before taxes are taken out).
    

5. Putting yourself in danger of running out of money by helping others too freely. This often occurs by well-intentioned parents that simply do not understand how to gauge the impact on their personal savings by giving away money to their family. Or sometimes it’s simply because they can’t say “No”. Sometimes this can lead to elder abuse as the children can take advantage of their parents’ generosity. Your children and grandchildren need to understand that they can take out loans for school, business, and housing. You can’t take out a loan for retirement!
    

6. Paying off the mortgage to prepare for retirement. Sometimes this is a great strategy, but sometimes it is not. You don’t want to simply pay it off in order to avoid having a payment without it being part of a well thought out strategy. It may just end up going to the nursing home or it could create a huge tax bill, depending on where you take the money from to pay it.
    

7. Paying too high of fees for your investment or retirement accounts − or simply not knowing what the fees are. Although the investment industry has worked hard to increase fee transparency it still has a way to go. If you think you are not paying your current advisor, that is usually a sign that the fees are hidden. Get an analysis to see what you are really paying.
    

8. Not protecting your assets from creditors, predators & a government gone wild. There are many risks to your portfolio including divorce, disability, accidents, nursing homes, legislative and tax changes and more. Many people only plan for the risk of market loss, but there are plenty of other sources that create a potential risk to your money.
    

9. Risking money you can’t afford to lose in the hopes of a better return. Warren Buffet said “Rational people don’t risk what they have and need for what they don’t have and don’t need”. Don’t take unnecessary risk simply to compete with your neighbor or your ego. Investing should be based on your personal goals and objectives.
    

10. Not having at least one guaranteed source of income, aside from Social Security, to last for both you and your spouse’s lifetime — so you can enjoy your retirement doing what you really want to do. If you spend your road trip watching the gas gauge to see when you will run out of gas, then you have missed the entire enjoyment of the trip itself. Our parents and grandparents had a much simpler retirement by having a pension. There is something psychologically appealing to replacing one paycheck for another.