Miscalculations To Avoid Before Retirement

February 22, 2014

People make mistakes and occasionally we might learn from them presuming it's not too late. If you discover a pretty serious planning blunder after you have collected your last payslip, your retirement years are probably going to suffer. Fortunately , forewarned is forearmed, which means finding out about common retirement mistakes will help you to avoid them in the future.

It’s a mistake to put off retirement planning:

In the opinion of the Employee Benefits Research Institute, 60% of today’s workers have not calculated how much they’ll have to save for their retirement needs which is the first step in retirement planning. It is a rather complicated process, and the assistance of a financial planner can be useful when making a step by step program that will take you to your goal. Take the time to review asset allocation, monitor investment performance, and make changes as needed. Though it may not be convenient, failing to plan will lead to missed opportunities, lost tax benefits, and less than golden retirement years.

It's a mistake to believe your savings are safe:

During the past, financial consultants frequently told their senior clients to put 60% of their savings in bonds and 40% in stocks, with a switch to 80% bonds upon retirement. Their logic was to shelter pension savings by reducing investment risk. With longer life expectancies, many view this guidance as invalid. Inflation, growing faster than the modest returns of so-called safe investments, will ultimately eat away at your savings and decrease your buying power.

Today counsellors recommend keeping the capability for growth in your portfolio up to and through retirement. A mixture of products which will get you a genuine rate of return after inflation and taxes should raise your purchasing power over a period or at a minimum keep it steady while still minimizing risk. Balance should be sought between investment security and making sure you have lots of savings all though your retirement.

It's a mistake to be very generous:

If you’re among the lucky few that assume that they have lots of retirement savings, you could be tempted to share your wealth with your family before you retire. While your children will certainly appreciate a paid trip through college or your assistance buying their first house, giving away assets now can put you in an awkward situation later . Nobody knows with certainty what the future holds. You’ll live longer than expected. You can need pricey long term hospital therapy. If you’ve been too liberal with your savings, you may find yourself without. Always take the long term view whenever using your savings and be mindful of the unforeseeable future.

It's a mistake to put down your budget needs:

Will you actually spend considerably less than you do now during your retirement years? During the past, a rule amongst planners was to expect post-retirement expenditures to be about 80 percent of your present ones. But this is not always the case. While you may not be commuting to the office each day, or spending money on work lunches, travel and leisure activities can cost even more. And, certain expenses like life insurance, health care premiums, and co-payments are likely to go up. Also, Medicare doesn’t cover things like dental, vision, hearing or skilled nursing costs.

As you contemplate what you need for retirement, your future is at risk from your happiness to your economic security. Avoiding mistakes will help you create a future full of hope. Spend the time to discuss your current position with a fee based certified financial planner ensuring they earn no commission fees on their advice or selling you financial products. Also be sure to put some of your savings to work using information and education such as what’s offered bySummerland Associates to help fulfil your ambitions. Making these little changes promptly will offer huge benefits in your retirement years.

John A. Larsen, the Managing Director of Summerland Associates, LLC, has worked in financial services for 20 years starting in banking. John has held Series 7, 63, and insurance licenses working with high net worth clients to craft better portfolios. John has spent the last 10 years refining advanced investment ideas into a series of applied methods that drive the Summerland Alerts. More articles can be found on Summerland Associates web site or via Wealth Building Ideas, published for iPads.


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