As you approach retirement, it’s important to make sure all your ducks are in a row. Here are 5 mistakes to avoid when approaching retirement.
1. Taking Too Much Risk
As you approach retirement, market corrections can have a big impact on the success of your retirement. If you plan on making a big purchase, did I hear RV, and the market corrects, you’d better be sure that your plan can support it. It’s also a good to have any short term goal money in less volatile investments.
2. Having a Concentrated Position
Employees with stock options often have concentrated positions in company stock. As a client of mine that worked for a large company in her town put it, the real estate, their investments, their employment, and many of things were tied to the success of this business. If you’re close to retirement, it’s a good idea to diversify.
3. Not Having A Plan
Sometimes we work so hard, and save so much that we’ve really not taken a breath, nor the time to see how far we’ve come. Saving as much as possible is a good plan. But you can make it better. Save with purpose and intent. As you approach your retirement date, well, at least 5 years earlier, have someone without a stake in your investments put together a plan to make sure you’re on track. I’d go to www.NAPFA.org to find an advisor.
4. Paying Too Much for Advice
If you’ve work hard saving your money, the last thing you want is for someone to “sell” you a product that has HUGE commission up front, especially if it’s not in your best interest. You’ll want to know how much you’re playing for advice. Check out my article Hidden FeesÂ inÂ Investing for where to look.
5. Ignoring Taxes
Taxes can bite you in the bottom if you’re not careful. But they can also prolong your plan with some good tax planning. Take advantage of zero capital gains and Roth conversions with lower tax brackets. This will make your nest egg last longer.
As you approach retirement, it’s best to not make mistakes with your money. This means reviewing your risks, including concentrated stock positions, diversifying, having a plan, watch your advisor expenses, and tax planning.