THE FISCAL BLUE PRINT
WITH COACH JEFF MONTGOMERY
Episode 50: 6 Retirement Killers to Avoid At All Costs!
On today’s show, we are going to discuss the 6 Retirement Killers to avoid at all costs!
(0:25) Practical Planning Segment:
From my experience, the number one concern for most folks when it comes to financial planning is outliving their money in retirement. Along with that, many folks are concerned about the costs of long-term care and paying for increasing health care expenses in general.
Soon-to-be retirees often express that they are worried about running out of money before they run out of life! A lot of these folks are also ‘winging it’ without a plan for their retirement, which brings me to retirement killer number one….
(1:20) #1 Not having a plan! Not having a plan means not having a written income plan that lays out where your money is going to come from during retirement.
We often talk about basic living expenses or minimum dignity needs: Food, Healthcare, Housing, Utilities, and Transportation.
What if we had a plan (that was adjusted for inflation, of course) that had one bucket of money dedicated to meeting those minimum dignity needs and is guaranteed. Things like social security, pensions, or specific annuity products would be considered *guaranteed.*
Then, another bucket within that plan would be considered the ‘fun money bucket. The money that aligns our core values with our goals, the one where we really get to live!
Overall, developing an income plan that meets your minimum needs AND meets your goals for how you want to enjoy life during retirement, should be priority number one!
(3:50) #2 Using the wrong Investment Assumptions.
Making a plan only works when you have accurate assumptions! I’m talking about correct inflation rates, assumed investment returns, and so much more. The success of your plan depends on the accuracy of everything that gets input, so make sure you are being honest and logical with every aspect of your plan.
One thing to pay attention to in particular is your risk tolerance, (check out our risk questionnaire here) After doing this, we are able to design an efficient portfolio that meets your specific risk tolerance. Ensuring your risk tolerance is aligned with your plan and strategy is extremely important.
Also, see if your advisor can stress test your portfolio by running a variety of different market scenarios to see what effect it could have on your plan. This could help your peace of mind tremendously.
(6:15) #3 Taking Too Much Risk with Investments
On the same note, don’t forget to protect what you already have. So many people can get caught up in the latest investing trend i.e. bitcoin, dogecoin, cryptocurrency, and other speculative investments. This is really interesting stuff, but not to risk your nest egg on. If you want to go to the wall street casino, open up a small trading account just for fun, but don’t risk your life savings on it.
(8:00) #4 Not Enjoying The Things You Care About
One of the things that I notice with some of my clients who are retired is that folks are afraid to spend their hard-earned money. There’s something about them not having a paycheck anymore that mentally puts them into preservation mode!
This takes us back to #1… if you have a good income plan, then this should give you permission to spend that money in the fun bucket and enjoy your life to the fullest!
(9:50) #5 Giving Too Much Money To The Kids
I’ve seen this retirement killer in different forms, personal loans, co-signing on mortgages, student loans, etc. I understand that folks want to help out their kids, but make sure you aren’t overextending yourself or sacrificing your own financial well-being while doing so.
(11:00) #6 Blindly Believing Your Financial Professionals When They Say You Are Going To Be Okay
Make sure you see the analysis behind this statement! Ask questions and ask for demonstrations, proof that you are indeed going to be okay.
We do something within our office called a Monte Carlo analysis, where we run a client’s portfolio/plan through 1000 different market scenarios over the course of their life expectancy and see what the probability of success is.
“We appreciate you joining us today for this episode of The Fiscal Blueprint.
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Having a mindset and living a life of abundance rather than scarcity will change the direction of your life forever!! Enjoy the Journey!!!
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