Six Mistakes You Might Be Making in Your Retirement Plan

By: Robert Jeter, CFP, CRPC

Every day, we sit down with current and prospective retiree’s to discuss their financial plans, and their strategy for retirement. Retirement planning and managing those plans in retirement is truly an art form, as it is all about improving the statistical probabilities of success and doing our best to reduce and address all known potential risks. With that being said, there are a few mistakes that we frequently see that I think solid planning and partnership can help improve.

Not starting at step 1 – What did you do first when you started planning for retirement? Did you budget what you would ideally like to spend? How can you have a serious conversation about investments, or social security without knowing what you will need from your resources? Spending is going to be step 1.

Failing to understand what it means to be “successful” – When I talk about being successful, I really mean not running out of money. Most retiree’s fail to grasp that the required return in order to make that happen is potentially much lower than you think. Most people I meet, think they need a much more aggressive risk profile to be successful.

Forgetting the area’s that can add substantial additional return – Think taxes. When you take your money out in retirement, have you considered your tax strategy? Most people fail to recognize their Social Security will be taxable. Not only taxable, but how it’s taxed can cause things to get quite pricey in retirement.

Using a strategy that you can’t hang on to – A strategy is a plan that has been stress tested and should stay together through any type of market. If you find yourself wanting out in the midst of the next major market correction, it probably wasn't’t the right match.

Forgetting about the planning – While it isn’t most people’s favorite topic to go over, addressing planning items and risks (outside of the portfolio) can help mitigate some of the most frequent problems in retirement. When is the last time you got your legal documents updated? Do you have all the right ones? Not having things like this in place, and more importantly up to date can have some pretty severe consequences.

Understanding what you own – If you have trouble explaining your plan, or your strategy to your spouse, neighbor or friend, you may want to revisit it. In a world of complex financial instruments, you want to ensure you understand why you own what you own and how it fits into your strategy. This should also be revisited periodically if you work with a professional, to ensure it is still the proper route.

Retirement planning is full of, misunderstanding and plenty of differing opinions. Having a well thought out plan that matches you is critical to your success as a retiree. It can often be the simplest oversight that can cause the largest amount of damage. Making sure you have the right partner helping you prepare and properly manage your retirement is something you don’t want to take a chance on.

Securities offered through Cetera Advisors, LLC member FINRA/SIPC. Cetera is under separate ownership from any other named entity.