December 3rd, 2019
Retirement Mistakes to Avoid
Millions of Americans are already retired. Many more millions expect to retire.
And a great majority of them (of us) will experience financial pain in some form. Some of this pain can be avoided if you know about it and take steps to prevent it.
There are two definitive ways to avoid this possible pain. (1) is to die before you reach retirement and two is to have more money than Jeff Bezos. Good luck with that. Chances are good (1) you will be alive and (2) will not have enough money.
I could easily list a dozen things that turn out to be a mistake when planning for retirement. But what’s the point? Despite a constant stream of articles about how millions of people retire and discover they don’t have enough money, it doesn’t seem to slow down the raft of people who apparently don’t give a damn. Besides, I need topics to talk about in subsequent posts.
However, if you’re one who really doesn’t want to experience financial pain in retirement, here are a few thoughts for you to consider.
Yes, having a ton of money helps minimize financial pain. The challenge is to realize at a relatively young age that unless you die before retirement, that day will come. It may be forced on you or it may come at a time of your choosing, but chances are high it will arrive if you manage to stay alive.
So a major challenge is to start saving early in life. If you work for someone else, and they are willing to make sure there’s an employer sponsored retirement saving plan in place, then you should participate. To the extent possible, you should at least try and meet whatever threshold there is for your employer to contribute to your account. Think of it this way; when it comes time to pay income taxes on that money, know that the tax you’re paying came from your employer.
From time to time if you are lucky, you’re going to get a raise. Somehow find the discipline to take some of that and set it aside for the future. OK, maybe it wont be there when you retire because something happened and you needed it, but failing that, it will make like much easier and pleasant and stress free if it’s still there when you retire.
Begin to understand that life is a journey and that it never moves in a straight line. There are going to be ups and downs and how you manage those ups and downs will go a long way to getting as much joy as possible out of every day, month, and year along the way.
You don’t need to satisfy every whim right now. You will have new whims along the way and they will still appear when you’re 75, assuming you get that far. Being able to satisfy some of those whims gives extra meaning to life. One goal I have is to live in the present and focus time and energy on tomorrow. And try not to have whims.
Lastly, realize that you may need professional help from time to time. Like a doctor or a dentist. Since you know you’re OK with that, understand that asking for help from a financial professional is not a cop-out. The challenge is to find someone you can trust to help you and work on your behalf. It’s called being accountable and being held to a fiduciary standard.
It’s one of the first questions you should ask of anyone from whom you seek financial advice. Among your first questions of them is this one: “If I hire you to help me make financial decisions, are you willing to be held to a fiduciary standard?” If the immediate answer is not an affirmative “YES”, be prepared to walk out and find someone else. I’ll let you Google the word fiduciary.
Tony Kendzior, CLU, ChFC
Got a question for Tony? Go to the "Retirement Talk with Tony" thread in our forums.