Avoid These Mistakes or Suffer the Consequences!

Investment and planning mistakes can sabotage your retirement. Putting all your eggs in one basket or being paralyzed by the many choices available can be destructive.

As the financial world and options change, we must all consider changing with it. That which was most advantageous two years ago could be the opposite today.

Common Investment and Planning Mistakes!

Failure to diversify is pervasive. This could stem from an attempt to be too conservative in retirement. An "inflation hedge" is necessary.

Adjusting your plan's allocations is not easy unless you are an experienced investor. Consider working with an knowledgeable investment advisor.

There will be less chance of making a serious mistake. Having a single plan without occasional adjustments is imprudent.

Overestimating the returns on investments is typical as we are optimistic beings. The difference between a 6 percent return over a 10 year period versus an 8 percent return with the same amount of money is enormous. Each $100,000 earning 6 percent for 10 years will have a future value of $179,085. At 8 percent, each $100,000 invested would have a value of $215,892.

Putting too much money into a single stock does happen. Often it is in the company that employs the soon-to-be-retiree. Consider limiting this to 10 percent of the portfolio.

Some people sell after a stock market downturn. They don't want to lose more money. They are emotionally drained by months of losing money. The more aggressive and savvy investors "buy low and sell high".

More Investment and Planning Mistakes!

By definition retirement planning requires a plan. Don't lose sight of your ultimate goal. My goal was to have enough money to retire comfortably knowing that there were likely to be many roadblocks and expenses along the way. Extra savings would be necessary to overcome the obstacles.

Remember, inflation is the most insidious of the hazards for people on a fixed income.

Withdrawal of funds in retirement accounts prior to retirement, with or without the 10 percent penalty, is a huge mistake. However, there are people who just have to have that new car or boat.

Post-retirement use of funds should usually be from accounts that are not taxable first.

Those retirees who believe that they can live on their Social Security benefits are likely to be disappointed.

Lifetime income in the form of an annuity should be evaluated.

For many long-term health care is a good choice. There is a conflict of interest for the agent selling the insurance as there is a commission paid to the agent.

Just as an annual physical examination by a qualified physician is recommended, so is an annual financial examination by a qualified investment advisor recommended.

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