Fri, 25 July 2014
The cost of a financial misstep in retirement can be devastating. During retirement it is hard to "earn" your way out of poor decisions. Poor planning or a big loss during retirement can ruin your financial security. In this episode I discuss the most common retirement "screw ups" I've seen and how you work to avoid them.
7 Ways to Screw Up Your Retirement
Having unrealistic return expectations for your investment assets (too high in 1990s, too low in 2007-08)
Crazy as it sounds, in the 1990s people retired thinking they could earn 15%-20% per year and take 10% from their assets for retirement income.
Today, we see the opposite extreme. After 2008-07, people aren't so optimistic about retirement. In fact, they are down right pessimistic.
Not sticking to a spending plan and reviewing it annually
When you retire it is essential that you become more intentional about your spending. In retirement your earnings power diminishes. You'll have less opportunities to earn your way out of poor spending choices.
Set a spending plan and review it annually. This will allow out adjust as your situation changes.
Falling in love with an investment or investment strategy
Real estate; Gold; Rental houses; Tech stocks; Dividend stocks. I've seen it all over the last 23 years. Just because you've had great success with a particular investment or strategy doesn't mean it is the be all end all. Managing assets during your retirement years is more about consistency and protection than stellar returns. The past is littered with "sure thing" investment that have gone bust. Just look at the list above.
Financially supporting/enabling adult children
I'm not sure where the line is between occasionally helping a child out and enabling them. We've seen retired parents destroy their financial security by bailing out their children from there poor choices. A good litmus test is to ask yourself: Are you preparing your children for the path, or the path for the child?
Starting or investing in a small business
Starting a business or investing in a new venture is exciting. Be careful. They all sound exciting at the start but most small businesses fail. Retirement is not the time to invest a lot of money in an entrepreneurial dream.
Buying expensive lifestyle toys (vacation home, R.V. or land)
Go ahead and dream big but be careful about spending big money on your retirement toy. It's very common to see older retirees saddled with debt on an expensive R.V. or vacation lot that isn't used and worth a fraction of the loan amount.
Sticking your head in the sand when it comes to your financial life
Not being aware and willing to address the financial realities of your retirement is a sure way to screw it up.
Retirement Tip of the Week
Complete your estate plan. Yeah it's boring and can cause some uncomfortable conversations, but get it done. Please
Tips to getting the estate planning questionnaire done:
Tips for Keeping it up to date:
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Thu, 17 July 2014
This week I speak with Burt White, Chief Investment Officer of LPL Financial. Burt and I discuss LPL's mid-year outlook Titled: The Investor's Almanac.
Burt and his team do a great job simply communicating the economic and investing environment. Their Investor's Almanac is a great tool to help us invest wisely. No bold predictions or market calls here, just easy to understand insights you can use to make better informed investing decisions. If you'd like a free copy of their Investor's Almanac you can access it in the Retirement Answer Library.
In this episode we discuss:
Retirement Tip of the Week: Designating a Trust as a Beneficiary of an IRA
Last week a client called requesting the beneficiary of his Individual Retirement Account (IRA) be changed to a trust. This planning strategy has become more popular over the last few years. This strategy for IRAs can has some benefits if the ultimate beneficiary is:
The trust can help protect the inherited assets and better control how those funds are used by the beneficiary of the trust.
Be careful using this strategy though. Done incorrectly, the strategy could conflict with IRS rules and possibly create big tax problems. It is important the attorney drafting the trust be familiar with certain aspects unique to inherited IRAs.
Some things to consider are:
Mon, 14 July 2014
In this episode, I'll show you how to come to terms with your worry and the uncertainty about retirement.
I talk to a lot of people about retirement. Not only clients but most everyone I meet over age 50. I'll always ask them what their #1 thought is on retirement. I've learned a lot from this exercise. The most important thing I've learned is that people worry about retirement....alot!.
They worry about:
In this episode, I'll show you how to come to terms with your worry and the uncertainty about retirement. Once you've done that, you'll be free to build a system to manage through the uncertainty in your life. I discuss:
How to begin to manage it by:
Building this structure is really what this blog, the Retirement Answer Library and podcast is all about.
Retirement Tip of the Week
The importance of tax diversity on your balance sheet as you near retirement. If you're within 5 years from retirement, why it may make sense to significantly lower the amount you save in your 401(k) retirement plan.
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A big THANK YOU to Dean for sending me your kind note, thanking me for the podcast and Retirement Answer Library. So glad it's been helpful to you. It really means the world to me.
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Sun, 6 July 2014
“How do I understand Social Security and Medicare?” This is a question I hear most often from people planning for retirement. It's understandable. Social Security and Medicare benefits will play a big part in your retirement.
In this episode we begin to unwrap both and begin to build a framework for you make decisions about your Social Security and Medicare benefits. I say we “begin” intentionally. These are BIG subjects. In future episodes, we’ll continue to improve your understanding of your Social Security and Medicare.
Retirement Tip of the Week
I suggest you visit and explore our government's Social Security website. It is an easy to navigate, useful resource to help you manage your Social Security benefits. YES, I just said “useful” and “government” in the same sentence. They did a great job designing the site.
You can easily:
Unwrapping Medicare: The Basics
This week I talk with Misty Kimbrough, a local insurance expert about the basics of Medicare. She outlines the basic parts of Medicare and the 3 most common missteps people make when planning medicare benefits for retirement.
Part A “major medical” coverage covering health care costs at hospitals
Part B Covers the costs of health care outside of a hospital. Doctor visits, outpatient procedures, x-lab test and related services
Medicare Supplements (Medigap)
Part C Medicare Advantage Plan
Part D Prescription Drug Plan
3 Common Medicare Missteps