Most of the time, routines are a good thing. They help simplify our days by eliminating decisions on little things. That saves the creative parts of our brains for the more difficult decisions we must make, says The (Spartanburg NC) Herald-Journal in its article, “Don’t make these retirement mistakes.”
However, there are times when routine can be a negative. That’s especially true when it comes to retirement. There are several perennial mistakes retirees make. Most are a continuation of doing things the way we have always done them—instead of making changes to the routine after retirement.
- Making Too Many Withdrawals. Spending too much money early on in retirement could result in your running out of cash later. Why? Individuals aren’t knowledgeable about health care costs, life expectancy, income needs and investment risk.
- Lack of a Plan. Retirees often don’t put together a financial plan that includes estate planning, a reasonable budget and other items for the short and long term.
- Failing to Accurately Judge for Inflation. If a nest egg isn’t earning enough to stay ahead of inflation and taxes, a retiree’s retirement lifestyle is likely to get troublesome well ahead of its time. It’s important to establish the appropriate blend of risk and return needed to maintain short-term purchasing power, in addition to working toward long-term goals.
- Staying on Autopilot. Some retirees fail to adjust the asset allocation of investment vehicles in their portfolio given their “stage of retirement” relative to life expectancy. They’ll have an inappropriate mix of investments for their lifestyle goals, timeframes and risk tolerance.
- Getting Scammed. One out of five Americans over 65 has been a victim of a financial scam. More than 7.3 million seniors are taken advantage of financially through inappropriate investments, high fees, or fraud—a cost of more than $2.6 billion a year. Many of the cases aren’t reported, so these numbers may be low!
- Taking Advice from the Wrong People. Many retirees heed financial advice from friends, family, and financial product salespeople, rather than going to an experienced estate planning attorney and other credentialed professionals. These critical decisions can impact the rest of a retiree’s life.
Reference: Herald-Journal (January 9, 2018) “Don’t make these retirement mistakes”