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
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Mailbag: Should I Fire My Broker?
Navigating life’s financial crossroads can be tricky, especially when it involves your financial future. In this episode of Retirement Ready, Eric addresses these complex issues head-on. How do you best evaluate your broker and your investment performance against the S&P 500? Eric says a lot of that comes down to setting expectations and understanding the risks. Then, Holly wants to know what to consider before making a midlife career change.
Read More
Putting It Off
We are all guilty of procrastinating from time to time. Financially speaking, though, this can get you into a lot of trouble. Let’s talk about the areas where it might feel better to kick the can down the road.
Read More
Common Scams to Avoid
Americans over 60 have lost more than $3.1 billion in various forms of fraud and scams in the last 12 months! Today we talk through some of the common scams people unfortunately fall for and how you can stay vigilant against it.
Read More
Financial Strategies: Agree or Disagree?
There are a number of financial ideas that people have differing opinions on. Eric shares today which of these he agrees with or disagrees and why.
Read More
Divorce Mistakes
Unfortunately, divorce happens. When it does, no one wants to make costly financial mistakes amidst an already stressful time. Today, we talk about the mistakes that can happen and how to avoid them when it comes to dividing up your assets with a spouse.
Read More
Villains of the Financial World
Just like some of these cinematic villains, some of these financial elements may have a bit of nuance and history that can make it hard to label them all good or all bad.
Read More
Uses for Life Insurance
When you’re younger, life insurance is often thought of as an income replacement as needed. But as you get older and into retirement, you might find other uses for life insurance. When thinking ahead for your estate and how it passes to beneficiaries, life insurance can prove to be a useful tool. Currently, the proceeds from life insurance are tax-free. How does that change how you include it in your financial plan? Eric outlines some of the options and benefits life insurance can provide.
Read More
Understanding Financial Risk
What kind of risks do you take in your financial life? As you get less comfortable with things like climbing up ladders and riding on skateboards, you might also become less financially risky. When you enter retirement, how you view your money in the market changes significantly from your working years. It’s important to look at your portfolio to ensure your investments match your risk tolerance.
Read More
Mailbag: What Financial Advice Should I Share with My Grandchild?
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read More
The Good Old Days
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read More