Retirement planning is one area of life that does not lend itself to a one-size-fits-all approach. For one thing, each of us is an individual and even our definition of "retirement" is unique to us. Some many want to chase a golf ball and others may want to chase grandchildren (and others, may want a healthy balance of both!).
Even the philosophical approaches of financial advisors can (and do) vary wildly.
In a word, retirement planning can be tricky, to say the least.
Consequently, it is wise to consider a variety of opinions and approaches. Better yet, it is only prudent to learn from the mistakes of others.
Against that backdrop, The Motley Fool compiled a list of 28 major retirement pitfalls, to include how to avoid them and how to get "out of the ditch" if you did not. The article is titled “28 Retirement Mistakes People Make.”
While I commend the original article to your review, here are just a few of the mistakes noted:
No Retirement Plan. Hope is not a strategy. Neglecting your retirement planning is one of the first and most perilous mistakes you can make. What is your vision of retirement? Will it take a lot of funds to finance it when you stop working completely?
Once you have some "numbers," then you have a "target," and can begin setting aside funds now for later. Select appropriate financial vehicles to receive these retirement-earmarked funds based on your time horizon and risk tolerance, among other factors.
Remember: Employers often offer 401(k) plans, and you can also open an IRA without an employer sponsoring the account. Either of these means, and others, are excellent ways to help you meet your retirement target.
Thinking You’ll Want to Keep on Working. I know you love your career and cannot dream of life without it. However, things change. For example, with every additional birthday your energy level may drop a tad or two. At some point, your health may not be what it is today.
In short, you might be ready to take it easy and retire at some point. With this in mind you should not skimp on your savings right now because you think you can work throughout your "retirement years" and earn more than you do today. Why? There will always be a youth movement and those folks will be willing and able to work for less.
Transfer on Death and Payable on Death Designation Issues. If you have a will or trust, the original article encourages you check your "transfer on death" and "payable on death" designations to make certain they match the planning in your will or trust. These designations control who will inherit those assets when you die.
A "Transfer on death" designation defeats directions in your will or trust because it operates independent of them.
Faulty Trusts. If you have designated "trusts" as the retirement plan beneficiaries for your children, then you need to have those trusts reviewed now to ensure that they will work later to minimize income taxation on those funds, as well as protect them from creditors.
This is one of the trickiest areas in all of tax law and estate planning to navigate successfully.
On the other hand, leaving your retirement funds "outright" to your beneficiaries may no longer protect them from creditors under the Clark v. Rameker decision last summer by the U.S. Supreme Court.
Contact an experienced estate planning attorney who can work in coordination your financial advisor to help you avoid all 28 retirement mistakes.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: Motley Fool (March 11, 2015) “28 Retirement Mistakes People Make”
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