Planning
Things to Consider
Did you answer “now”? That would be everyone's first option, but pause for a while and think about what age you want to retire. Would it be age 55? Is it at age 60? Unexpected changes in your life can't be ruled out, so even though your decision may be based on your "best guess,” setting an actual retirement date is crucial.
Will $2,000 per month be enough for you? Is $5,000 the amount you need? Will $7,000 suffice? If you are unsure, industry experts suggest it should be 70%–80% of your pre-retirement income.
Estimating your pension is easy. With the right information, you can arrive at how much you need to be putting away to fill in the gaps.
A quick review of your portfolio will tell us if it is designed to meet your retirement needs. For example, if "your plan" tells us that you need to earn 6% on your portfolio to reach your goal, and your money in the bank earns 1%, changes have to be made to reach your goal.
These are just some of the things to consider when planning for your retirement. Let’s now discuss the common mistakes that you might be committing and how you can resolve them.
Common Mistakes
All investments come with fees, but how much you pay in fees is well within your control. Some companies offer plans with low-cost or no-load fees. Whether you work for a school district, a corporation, or you are self-employed, there's always an option that suits your situation.
Please click 'here' for more information about the fees associated with my firm.
Not sure? I’m not sure anyone can tell you the best place for your money a year or two from now…Why would you lock your money up for a decade or longer? The majority of annuities come with some form of surrender charges. It’s important that you understand the amount of these charges and how long they last.
Like most people, you probably look forward to the day when you retire and spend more time doing the things you enjoy. That time will come much sooner than you think. You have to prepare for it—start saving and investing.
Many school employees or self-employed individuals just invest without any real plan for the future. Having a clear retirement goal gives your investments direction. A lot of times, clients can reduce the risk/volatility of their portfolio and still reach their retirement goal.
If you allocated your money correctly, the varying investments in your portfolio would grow at different rates. When this happens, your portfolio may start to take on a whole new risk level than you originally intended. Rebalancing periodically will bring your portfolio back to its original allocation. Not reviewing your accounts annually means that precious time can pass before you realize something is not right.
Listening to your co-workers or friends about their investments can be dangerous. Often, they will only tell you the "good news" about their portfolio and not tell you the whole story. They may skip sharing with you some important details about the investment or embellish the rate of return. You don’t have to compare your progress with theirs. What matters is that you have a clear plan, and you are monitoring your progress toward your goal.
If you start your TSA (Tax-Sheltered Annuity) or 401(k) with a small monthly amount, you must commit to increasing your contribution, even by a small amount each year. How much? A simple retirement analysis and the creation of a clear retirement goal and/or plan can help you find the answer.
Of course, there are many other mistakes that can be made, such as:
- Over diversification
- Under diversification
- Speculation
- Panic
- Euphoria (greed, over-confidence, looking for short-term performance opportunities)
- Leveraging
- Letting your cost basis dictate your investment decisions (your investments don't know what paid for them)