Monday, March 14, 2016

Avoiding Retirement Planning Mistakes

Entering retirement is potentially a time of less stress, reinvigoration, reimaging oneself, travel, and reinventing oneself. The major problem with this is it takes enough money to navigate retirement comfortably.
The article Top 10 Retirement Planning Mistakes lists 10 technical reasons that lead to poor planning and execution. The big ones are not saving soon enough, not anticipating inflation and taxes, unpredictable medical expenses, retiring with excessive debt, and not understanding the rules of disbursement of funds.
Social Security and Medicare should not be the cornerstone of any retirement plan but an adjunct.

My associates and I have made significant errors in planning, predicting the future, and learning how to live on a budget.
The following are some classic errors to which I am party to many.

1.      Not realizing you may live 20 years past retirement.

2.      Owning and still paying off expensive homes and cars.

3.      Paying everybody else’s bills. The children though grown are still on the dole.

4.      Not saying “NO” to everybody on your payroll.

5.      Not treating the disease of fixed expenses before it is too late.

6.      Getting divorced.

7.      Thinking retirement planning is not a dynamic enterprise, but due to longevity changes from year to year.

8.      Trying too hard to leave a decent inheritance. Informing your relatives that any money spent now is money they will not get in the future.

9.      Getting off the endless need to buy more and more. If you shopped in your own closet, you will find things that are back in style.

10.   Avoiding get rich schemes.

11.   Establishing limits on credit card usage. Calculate how much money a person can spend a day. This brings harsh reality to bear.

12.   Not staying in physical shape.

13.   Not getting help in picking the best Part B Medicare supplement as the cost differs wildly.

14.   Getting advice on when to take your social security check. This is a very individual decision.

15.   Going out to dinner instead of lunch. Lunch menus are significantly cheaper. Drink at home.

16.   Learning the rules of mandatory distribution of IRA’s at 70 and ½.

17.   Not divesting your investments in a common sense orderly fashion. Certain investments should be liquidated before others.

18.   Not warning your children that you may have to move in with them if they keep asking for money.

19.   Not leaving a will or estate planning. If you hate your family, this is a good plan.

20.   Being realistic about potential health costs. Even healthy people can easily spend greater than 6 figures their last year of life. Hopefully your insurance will cover this.
Bottom line is to enjoy life and retirement. Do not be plagued with the constant worry of money. Remember, your relatives and dependents can always get a job.

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