Potential investment pitfalls to avoid at retirement time include: over reliance on high yield investments to achieve your income requirements. Also, putting your money in high fee investment products such as mutual funds or annuities can significantly drag on your returns as well. I would make sure to carefully research and work with an advisor that you align with philosophically in order to avoid these mistakes.
This is a great question and it's good that you're asking it.... The biggest mistake is simply approaching your retirement willy-nilly (that's a technical term!) and not doing any formal retirement planning. You need to know what you want to do in retirement, what the price tag will be, and how you're going to play a smart game of chess coordinating your various retirement resources to cover it. Here are several other specifics: 1) Failing to consider the non-financial implications (emotional/psychological) of the transition from active employment to no employment. 2) If married, assuming your spouse is on the same page as you...don't assume anything, talk through it together. 3) Closing the door to part-time employment or business doing something you really enjoy, which could also help sustain your retirement finances. 4) Claiming Social Security too early and/or failing to even analyze your options. 5) Underestimating healthcare expenses and potential long-term care needs. 6) Failing to arrange an appropriate mix of investments and guaranteed financial resources to make sure you don't run out of money before you run out of life. 7) Depending on your circumstances, failing to shift your investment thinking from growth to "sustaining" and preserving. Folks in retirement don't get a "do-over" if they get it wrong. You owe it to yourself to engage the issues and do the necessary planning. And given the importance of the transition, most folks would benefit by hiring the guidance of a (genuine) financial planner to help them think through the issues and assess the trade-offs. I hope that helps. Feel free to reach out with any questions. SecondHalfPlanning.com
is different but here are some common things that you can watch out for if you
plan to retire soon:
- Taking out social security benefits too soon: by waiting a
little longer, you may be able to collect a lot more in the long run.
- Fail to predict your cost of living: Many people don't know
how much money they need to save for retirement because they don't track their
spending and budget. Don't forget to leave room for unexpected expenses during
your retirement, especially rising medical cost.
- Delay transitioning to an income-generating portfolio: At the
beginning of your career, you may focus on investments that produce long-term
growth. When it comes to retirement, however, you need to focus on
income-generating assets that can cover your living expenses. This transition
can be a complicated process and require some advance planning. It's best to
review your portfolio and finances with a certified financial planner to decide
the best course of action for you.
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