Top 5 Retirement Money Mistakes
In this video, we review the most frequent money mistakes we see with high net worth individuals in retirement.
After 17 years in the financial planning business. These are the 5 most common mistakes I see on a monthly basis.
1. Not managing your expenses: lifestyle creep
If you want to take control of your money, you need to know where it is going first. Expenses are the area you are in full control of. It’s hard because you want to enjoy the money you saved up while you are healthy and mobile. But making sure you are spending within reason will allow you to also have funds available later in retirement. Don’t forget to track what you are spending on and if it is important to you.
2. Borrowing too much
If you are currently in debt from borrowing, be careful. Many times, clients will put themselves in debt to help their children or others. Make sure your portfolio or pensions can support your spending and debt payments. Then, decide how much you’ll put toward your debt payments each month and stick to it. Don’t take on new debt if you can help it.
3. Not focusing on the total return
It is easy to focus on how much income I have today from investments. But income is only half of the equation and with yields at all-time lows, you don’t want to be chasing returns to a point where you take on way more risk than you should.
4. Not having an ongoing financial plan
Since no one knows their longevity financial planning can allow you to have a glide path to have a balanced conversation around spending now and making sure you have assets later in life. It will also cover the unexpected situations in which you may need more help or if a spouse predeceases, and how to address income needs in these situations. Your financial plan will also help your financial advisor figure out what the best investment opportunities are based on your situation and will influence liquidity needs, time horizon and cash flow.
5. Not setting goals that are connected to what is important to you
Aligning your values to your goals to your spending is what research has shown provides the best connection and engagement throughout retirement. At Client First Capital, we have developed a workbook to help you align these three areas. You can download a copy of the worksheet, or contact us for more information on reviewing your financial plan to help avoid money mistakes in retirement.
