Avoid These Retirement Mistakes

Hey welcome to this segment on how to avoid retirement mistakes. I want to start with a quick story of my identical twin sons. I’ve learned that they approach learning in different ways. My son Jackson can quickly be corrected with words. We can just give them warnings and talk to them, to talk to him rather, and he’s going to listen and follow suit. My son Breck on the other hand, he has to learn through experience. How did I learn this? Well the first time I learned it was when I was pouring cement at my house. And the twins were right there in the garage, looking at that wet cement. And I said, “Jackson don’t step it’s wet cement, don’t do it”. And then I looked at Breck and I said, “Breck, don’t take another step”. And Breck looked at me and still he put his foot out and pushed his foot into that cement, experienced what wet cement felt like, okay. I left it in my driveway because I know there’s going to be a time, maybe when he is 16 years old and I need to come back and point to that be like, “you know you had to experience the pain of mistakes and regret, maybe we could work on using words and wisdom to avoid them”. So sorry for that long-winded story but hopefully you can understand, maybe look at them through the lens of what we see retirement mistakes look like. The first one is not getting an early start, missing out on compound interest, missing out on the time when they’re early in life, and putting that money away and letting time do some of the work. You know, they, all of a sudden look at 40, 50 years old and they say, “oh I better start saving for my imminent retirement”. And we find that okay, well it’s going to be a little bit longer than what you had anticipated. The next one is, reducing their savings over time. Sometimes when they first start working, young, saving their four or five percent and then as time goes on in life, kids, vacations, finding stuff to need, getting in the way, and all of a sudden their savings are going down as they get closer to retirement. The next one, overlooking contribution opportunities. You know, as soon as you turn age 50, your 401(k), your IRAs have different catch-up provisions. The amount of money that you can put in increases. And so when people either don’t know about that or don’t care about that, then they are missing these opportunities to get aggressive in their savings, in their tax diversification, you know, later in their higher earning years a lot of times. The next one is putting all their funds in one place. How much market risk do you have? And by that I mean how much bond market risk and how much stock market risk do you have? You know, what are your no-market risk alternatives. The Feds have raised rates 15 times and counting and that’s given us some no-market risk money that is something everybody should be looking at, I think. To see how they can have some diversification in their risk buckets. The next one is carrying too much debt. On the heels of those interest rates coming up, we see a lot of people with these home equity line of credits or these variable interest rates on debt and that went from, you know, 2, 3 percent up to to 7, 8, 9, 10 percent. And so being able to take care and not carry all that debt and pay all that interest out, is a huge mistake you can avoid. The next thing is not considering housing possibilities. If you’re nearing retirement or in retirement and you’re worried about what it might cost, do a quick Google search, top ten cheapest places to retire in the United States. I think you’ll be interested to see what different places and different taxes and different costs of living there are in the United States. But people get locked into, this is home, and that can be good too, but, you know, just opening yourself to other possibilities, you know, could avoid those expensive places if that’s what you’re living. The next one would be overestimating your nest egg. Okay, this is where, you know, you’ve experienced inflation and what you thought your spending was going to be each month has gone up. And you’re going through your budget and you’re saying, where did all the money go? Well, our eggs went for half the budget, right. You know just all the spending and inflation. So people that don’t have a really good long-term, written out income plan can get in trouble there. The next one is forgetting your tax planning, okay. They just put their nose down, they go to work and they become singularly focused on one tax bucket. And that can be a huge mistake. And then finally, not looking into long-term care. That might be a risk that you want to deal with. So, hope you enjoyed this segment. Have a great day. We’ll see you next week.