{"id":12324,"date":"2018-01-22T07:57:03","date_gmt":"2018-01-22T15:57:03","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=12324"},"modified":"2018-01-22T07:57:03","modified_gmt":"2018-01-22T15:57:03","slug":"5-retirement-planning-mistakes-avoid","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/5-retirement-planning-mistakes-avoid\/","title":{"rendered":"5 Retirement Planning Mistakes To Avoid"},"content":{"rendered":"

Many people do their own retirement planning, which is fine. Yet most should at least consider hiring an advisor with planning experience. A small mistake can be corrected if caught early. Once you let the years go by, the results are baked into the cake.<\/p>\n

You’ll have to eat that cake, sooner or later. For you own planning, here are five big\u00a0retirement mistakes people make.<\/p>\n

Mistake No. 1: “I’ll need money for about 15 years”<\/strong><\/p>\n

One\u00a0big retirement mistake is that people underestimate how long they are going to be retired, thinking they’ll retire at 65 and die by 80 or so. Yet between two married people,\u00a0one might live for 30 years in retirement<\/a>. If you are statistically affluent, you might live to be 100.<\/p>\n

You know (or should know) that after 30 years everything is going to cost\u00a0twice as much or more just because of inflation. Because people underestimate how long they will live they invest improperly, which leads to\u00a0the second mistake.<\/p>\n

\"retirement\"<\/p>\n

Mistake No. 2: “I should own mostly bonds and avoid stocks”<\/strong><\/p>\n

When you are investing for retirement, you have risk on the front-end (volatility)\u00a0and\u00a0risk on the back-end (inflation). Most people, however, seem to want an account statement that doesn\u2019t give them any surprises, one that show\u00a0the same, steady balance every month.<\/p>\n

Avoiding volatility with fixed-income investments means you won’t have\u00a0protection against inflation. For that,\u00a0you need investments in\u00a0stocks. Any portfolio\u00a0that leads to an\u00a0account statement that is the same every month is one that\u00a0won\u2019t get you where you need to be\u00a010 years from now.<\/p>\n

Mistake No. 3: “Dividend stocks offer\u00a0income plus\u00a0growth”<\/strong><\/p>\n

Retirement investors fixate on current yield over\u00a0total return. When I sit down with retirees, they get hopped up over an investment because it\u2019s yielding 4% or 5%. But the higher payout means\u00a0a\u00a0lower long-term return because you\u2019re getting more of it upfront.<\/p>\n

When there\u2019s water in the well it shouldn\u2019t matter whether it\u2019s from rainfall or snow, so long as there is water in the well. The average retiree these days is holding most\u00a0of his or her portfolio in large-cap dividend-paying stocks<\/a>. Dividend-paying stocks can get overpriced or underpriced. Who\u2019s to say they won\u2019t be the laggards over the next 10 years?<\/p>\n

Mistake No. 4: “I’ll spend less when I’m older”<\/strong><\/p>\n

The other big retirement mistake\u00a0is the idea that your expenses fall dramatically over time. Every retiree thinks that in their\u00a080s expenses drop big-time. You’re not going travel as much, eat out as much, and so on. I<\/span>t becomes a license to spend more early in retirement.<\/p>\n

The truth is, I have not seen people\u2019s expenses drop dramatically, but I have seen them shift. The percentage you spend on healthcare, or your grandkids, changes. <\/span><\/p>\n

Assuming your expenses will continue to rise is thus a safe assumption.\u00a0<\/span>If healthcare becomes a bigger slice of the pie, it will rise at double the rate of inflation. You will\u00a0use more of your income to pay for medicines, therapy, things\u00a0out of pocket. It\u2019s going to rise a heck of a lot faster than going to the local pizza joint for a chicken parm dinner.<\/p>\n

Mistake No. 5: “Retirement is about doing nothing”<\/strong><\/p>\n

It’s a n<\/span>on-financial point, but it matters. People underestimate how valuable it is to keep something in your life to focus on, something to bring meaning to your retirement. If not, you end up just running out the clock. Yes, you might have family but often they live in other states, especially if you move to a lower-cost state in retirement.<\/p>\n

You need to find things to make sure retirement is enjoyable, not just the absence of work. Maybe you learn something, maybe you do some consulting. You get old quickly, I find, when you don\u2019t have something to do.<\/p>\n

Look before you leap. Unless you are forced out, I don\u2019t see why folks are so eager to retire. I\u2019ve talked some folks out of retirement<\/a>, and they\u2019ve been happy that they did it. Even if you take a pay cut, it\u2019s wonderful to keep yourself engaged.<\/p>\n

MarketRiders, Inc. is a registered investment adviser.\u00a0 Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.\u00a0 Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and\/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.<\/i><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

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