Today’s Prep:
Do you have a strategy in place to avoid these retirement planning mistakes? Eric talks through what to do instead to make sure your plan is a success.
Equipping Points:
Nobody likes making mistakes, but it happens from time to time. What are the biggest retirement planning mistakes that people make and what can you do to avoid them?
A major mistake many make is ignoring or forgetting the future tax implications of your retirement savings. The vast majority of people save in qualified plans like a 401(k) or 403(b) that grows tax-deferred. You need to have a diversity of incomes coming from different tax sources: taxable, tax-deferred, and tax-free. You may need to move money from one bucket to another. Roth conversions are an easy way to do that.
People who start Social Security too early may end up regretting this. There’s a lot of strategy that goes into choosing when to start Social Security. The best way to determine what to do is to have a Social Security analysis to compare your options as a part of a bigger plan.
Are you paying more attention to your returns than your retirement income needs? The returns are easy to focus on but remember that you have to take risk in the stock market. The income equals the outcome, which is why you need to focus first on the income needs. The trend of the market will vary but you need a consistent flow of income.
Your friends and family mean well, but taking their advice for financial decisions is not the same as getting advice from a professional. The clearer your objectives are, the clearer your goals are, then the better the planning process is going to be. An advisor is going to ask the tough questions that you need to face when making a plan.
Being too aggressive or too conservative in the market will be a problem. How do you strike the right balance? It’s important to remember that it changes at different points in your life. You need to find a strategy. A plan will help you see what tools and what strategies you need to make your plan work.
Listen to the entire episode or skip ahead to a particular mistake using the timestamps below.
1:01 – What are the top five retirement planning mistakes?
1:09 – Ignoring the future tax implications.
2:49 – Starting Social Security too early.
5:05 – Focusing on returns vs. the income needed.
6:56 – Taking advice from friends and family.
8:25 – You have to find the right balance.
Today’s Takeaway:
“The clearer your objectives are, the clearer your goals are, then the better the planning process is going to be.“
-Eric Peterson
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