If you are a sports fan, you were probably glued to the television set this past Sunday night, watching a terrific Super Bowl matchup of 2 great teams with VERY different styles.
For nearly 3 and 1/2 quarters, the 49ers executed on their game plan. They ran the ball. They controlled the clock. Their stifling defense had kept the Chief’s explosive offense in check.
With less than 12 minutes left, the 49ers had a 10-point lead & possession of the ball.
At that point, an ESPN analytical tool had them at 96%+ to win the game…
But they did not finish strong! It all fell apart (and so very quickly) as the Chiefs outscored the 49ers 21-0 over the last few minutes, ultimately becoming Super Bowl Champions!
As I have pondered this game over the last few days, I can’t help but think about how many people make the same mistake with their retirement planning.
During their working years, they seem to do everything right – but when it comes to the 4th quarter, they end up making mistakes that “cost them the game,” aka – living a retirement that was less than their ideal.
So, what can go wrong late in the game? Here are 5 mistakes I commonly see:
1. Retirees are often not able to switch their mindset from “accumulation – focused” to “distribution – focused.”
They focus on their account balances, at the expense of converting those assets into income.
Thus, they do not receive enough regular income to maximize their lifestyle and live their retirement dreams.
2. If they are prudently following the conventional wisdom of the 4% withdrawal rule, they could end up in a position where they are a “401k Millionaire” but receive only $40,000 per year from their investments.
After taxes, that will generally net them between $2,500 – $3,000 per month of spendable income. For some people, I am sure that is fine, but is it optimal?
3. Many are not following a spend-down plan at all.
They simply take their Required Minimum Distribution every year and plan to leave the remaining money to their children when they die.
Unfortunately, this often leads to the Internal Revenue Service becoming the primary beneficiary of their life’s work at the expense of their family.
4. They have not planned for a Long-Term Health Care incident.
Many are convinced that “it won’t happen to me” or “my spouse will take care of me”.
By the time a retiree realizes this mistake and attempts to purchase Long Term Care insurance, their age or their health often prevents them from qualifying.
5. They have not utilized an immediate annuity in their retirement plan to maximize the efficiency of retirement income (as noted above, the pre-tax 401k / IRA is a terrible distribution tool).
Thankfully, more and more people are implementing this strategy, as annuity purchases have been on the rise.
Bonus Question: Do you have proper life insurance in place to maximize your pension strategy, and to replace their social security benefits for your spouse?
As someone who possesses the RICP® Designation from the American College of Financial Services, this is my specialty. We look beyond your current IRA balance and consider the entire scope of retirement.
This includes mitigating key retirement risks, maximizing income distribution efficiencies, and encouraging you to optimize the rest of your portfolio assets for growth, to offset the effects of inflation.
Feel free to reach out at any time about these areas; I am here to help you not just finish the game strong, but to WIN! To me, that means living a comfortable, secure, WORRY-FREE retirement!
P.S. If you haven’t checked it out yet, please stop by my mini online seminar How Retirees and Pre-Retirees Can Potentially Avoid Going Broke While Keeping Their Nest-Egg Secure! Tons of great information and bonus is it is 100% COMPLIMENTARY!
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